WASHINGTON-In a flurry of legislative horse-trading capping the close of the 105th Congress, Senate Commerce Committee Chairman John McCain (R-Ariz.) got a provision tucked into the fiscal 1999 omnibus budget bill enabling the Federal Communications Commission to retrieve swiftly licenses of wireless firms that declare bankruptcy.
The measure, if it remains intact in the $500 billion spending package, could prove devastating to NextWave Telecom Inc., Pocket Communications Inc. and General Wireless Inc., and translate into a huge victory for the FCC and cellular carriers.
In essence, the change in law clarifies that FCC licenses won at auctions are not property subject to bankruptcy code.
“We’ve been consistently advocating this and we think this is consistent with draft legislation language” in the bill, said Dan Phythyon, chief of the FCC’s Wireless Telecommunications Bureau.
FCC Chairman Bill Kennard and his predecessor, Reed Hundt, have been pushing for such a legislative fix for the past several years.
Phythyon added, “It would be great” if Congress enacts the legislation because it will help the FCC carry out its auction program.
The McCain bankruptcy provision sits well with some cellular carriers, whose strong opposition to a C-block bailout-led by House Commerce Committee Chairman Thomas Bliley (R-Va.)-contributed to the bailout’s demise.
The Clinton administration was strongly opposed to the now-defunct C-block bailout. Indeed, the Office of Management and Budget predicted it could have cost taxpayers $1.1 billion had it been signed into law.
Had the Bliley bailout survived, incumbent cellular operators would have faced new competition from major PCS upstarts with vastly reduced debt loads.
Bliley was backed by House telecom subcommittee Chairman Billy Tauzin (R-La.) and Reps. John Dingell (D-Mich.) and Edward Markey (D-Mass), both highly influential telecom lawmakers.
While winning the C-block fight with Bliley, OMB lost a separate dustup with the Virginia Republican involving the White House’s push to speed up auctions-particularly the sale of 36 megahertz from TV channels 60-69 that Congress in 1997 said could not be sold before Jan. 1, 2001.
NextWave, Pocket and GWI have scores of digital mobile phone licenses tied up in bankruptcy proceedings.
NextWave bid $4.2 billion and Pocket bid $1.4 billion for C-block licenses in an FCC auction that ended in May 1996.
GWI pledged $1 billion for broadband C-block PCS licenses, but much of what it owed the federal government was substantially wiped out by a bankruptcy court. Even though it since has emerged out of bankruptcy, GWI got tagged by the McCain bankruptcy amendment.
All told, the three top C-block bidders that went bankrupt accounted for $6.6 billion of the total $10.2 billion the FCC thought it had raised.
FCC General Counsel Christopher Wright, noting the agency’s appeal of the GWI bankruptcy ruling, said the case “is very much alive” and thus is covered by the McCain provision because of its retroactivity clause.
“This is U.S. lawmaking at its worse,” said Dennis Spickler, GWI’s vice president and chief financial officer.
“I think there is a whole issue of constitutionality,” said Spickler. “Is it really the intent of Congress to change the laws of the country in an appropriations bill. To me, it’s shocking as a citizen. We’re going to pursue all angles.”
Despite the announcement late last week that Congress and the White House had reached a deal on the 1999 budget, congressional and administration aides cautioned that because they have not seen the final legislative language and because the bill will not be voted on by both chambers until early this week, the possibility exists that changes still could be made.
Indeed, NextWave-which declined comment-was furiously lobbying Capitol Hill Friday to try to undue the McCain bankruptcy provision.
Elsewhere, Rep. Joe Barton (R-Texas), chairman of the House Commerce subcommittee on oversight and investigations, announced he will refer the Portals lease probe to the Justice Department.
The FCC is scheduled to begin moving into the Portals the end of this week.
In other actions, Congress voted to increase the number of high-tech visas; to establish uniform national guidelines for high-tech securities litigation; and to foster a smooth, speedy Y2K conversion for government and private sector computers.
In addition, lawmakers approved an Internet tax moratorium and a limited tax credit for high-tech research and development.
