WASHINGTON-The lack of transparency in the processes at the Federal Communications Commission is exemplified by the litigation strategy and auction scheduling in the personal communications services C-block, said FCC Commissioner Harold Furchtgott-Roth.
While Furchtgott-Roth believes the FCC’s Office of General Counsel should have discretion as it deploys its litigation strategy, it is often unclear what avenue OGC will take, he said.
“Sometimes OGC goes to the mat, sometimes we lose in court and you never hear about it again or we declare defeat,” he said.
“Another subject of substantial discretion is the timing of auctions,” Furchtgott-Roth noted in his monthly press briefing. But, unlike OGC’s discretion, which Furchtgott-Roth seemed to believe was appropriate, he said auction scheduling sometimes doesn’t make sense.
“There seems to be a great deal of urgency over [the timing of the upcoming C- and F-block re-auction] though there is a great deal of uncertainty. It is just not obvious how that judgment was reached,” said Furchtgott-Roth.
The FCC has said it will re-auction the licenses reclaimed from bankrupt NextWave Telecom Inc. and others on Dec. 12.
The timing of the auction is also the subject of a stay request filed last week by NextWave at the FCC. If the FCC does not rule by the end of business on Wednesday, the bankrupt licensee is expected to ask the U.S. Court of Appeals for the District of Columbia Circuit to stay the re-auction.
While the licenses involved were originally set aside for small businesses, the FCC recently changed the rules to allow large carriers to bid for a portion of the licenses.
The FCC’s new eligibility rules split the 30 megahertz C-block licenses into three 10-megahertz licenses and allow large players to bid on two of the three licenses for all markets with populations of more than 2.5 million, one license in the smaller markets, all of the 15 megahertz C-block licenses above 2.5 million pops, all F-block licenses and the 27 licenses remaining from the 1998 re-auction.
The timing of the re-auction is subject to various legal maneuvers in addition to NextWave’s stay request.
NextWave has appealed the original decision by the U.S. Court of Appeals for the 2nd Circuit-the decision that prompted the FCC to cancel its licenses and announce they would be re-auctioned-to the U.S. Supreme Court. The Supreme Court is expected to make a decision whether to take the case sometime next month.
The bankrupt company also is expected soon to ask the high court to review the 2nd Circuit’s second decision, which gave the FCC even more ammunition.
Meanwhile, the U.S. Court of Appeals for the 5th Circuit has yet to rule on a case involving Metro PCS (formerly General Wireless Inc.). When this case was argued in February, the government urged the 5th Circuit to follow the 2nd Circuit’s lead.
In addition, the District of Columbia Circuit recently heard oral argument on the FCC’s 1998 plan that allowed C-block licensees to restructure their debt and-in most cases-give back at least a portion of their licenses and pay for their remaining licenses with their auction down payments.
U.S. Airwaves Inc. and Sprint PCS argued before the District of Columbia Circuit that they were harmed when the FCC allowed C-blockers to restructure their debt rather than default and, in the case of U.S. Airwaves, made their licenses available for re-auction; and, in the case of Sprint, relieved them of debt.
Also on the C-block front, 21st Century Telesis Inc., which had its licenses canceled for nonpayment, recently asked the full commission to reinstate the licenses.
The crux of 21st Century’s argument is that it did not receive proper notice of when payments were due and how much was owed.
“The [FCC] may have provided some, albeit wholly insufficient notice. The promissory notes do explain that quarterly payments are due at the end of the 1st, 4th, 7th and 10th month of each year. However, they do not set forth the date upon which `default’ will occur; nor do they state that the remedy for default would be `automatic cancellation,’ contrary to what was reported in the staff cancellation declaration. Indeed, the confusion created by the revised grace period rules was sufficiently considerable that the [FCC] was in the process of changing its rule at the very time that 21st Century allegedly defaulted,” said 21st Century.
21st Century also says the FCC acted unfairly when it canceled its licenses, but asked for comment on what to do with the licenses of Airadigm Communications Inc.
“Regardless of the final outcome of the Airadigm proceeding, the mere fact that the [FCC] has solicited and is weighing carefully comment eviscerates any validity to the claim that licenses `cancel automatically,'” said 21st Century.
