Court Victory.
July 23, 1999
Dow Jones Newswires
Qualcomm Wins 7-Year Fight With FCC Over
Spectrum
By Mark Wigfield
WASHINGTON -- Qualcomm Inc. (QCOM) has won a long-standing legal
battle with the Federal Communications Commission over a valuable chunk of
wireless spectrum the company had sought.
However, it's not clear how the FCC will compensate Qualcomm. Qualcomm,
which produces digital phones, software, global position systems, and satellite
ground stations, is no longer in the business of providing wireless telephone
service in the U.S., and the license in Miami in question is now owned by Sprint
PCS (PCS).
"It is something of a dilemma about what they will give us," said Kevin Kelley, a
senior vice president for Qualcomm. "We have no interest in upsetting Sprint's
ownership of the license. We'll have to find something equivalent."
FCC attorneys could not be immediately reached for comment about whether
they will appeal the decision by the U.S. Court of Appeals.
In 1992, Qualcomm applied for a license for wireless spectrum under a
program called the "pioneer's preference." The program was meant to spur
development of new services and technologies by granting discounts and
preferential treatment on licenses to applicants employing cutting-edge
technology.
Qualcomm, which has annual sales of about $3.7 billion, pioneered the digital
wireless standard known as code division multiple access, or CDMA. It
applied for the Miami license under the pioneer's preference program "to deploy
the technology and show how it worked," Kelley said.
The discount on the license alone would have been worth about $160 million at
the time, Kelley said. And "pioneers" got other benefits, too, including
favorable, long-term payment plans and a head start on entry into a market.
But the FCC in 1992 denied Qualcomm's application, saying the company's
work "was merely an adaptation of previously developed technology." After
being rejected in subsequent reviews by the FCC, Qualcomm appealed the
decision to the U.S. Court of Appeals in 1994.
And in 1997, the court ruled against the FCC, saying that Qualcomm had
indeed "performed significant new work," and that the FCC's rejection of its
application had been arbitrary and capricious.
The court remanded the decision to the FCC. The remand only gave the FCC
the authority to find for Qualcomm an equivalent to the Miami license, now held
by Sprint, and not to review the case itself.
But the FCC shot down Qualcomm's application again, this time saying
Congress withdrew the FCC's authority to grant the preferential licenses in the
1997 balanced budget act.
Qualcomm appealed once more, arguing that the FCC did have authority to
grant the preferential licenses when the original application was made.
The Court of Appeals Friday again sided with Qualcomm, saying that Congress'
action could not reverse the earlier appeals court ruling ordering the agency to
find an appropriate remedy for Qualcomm to compensate it for being
improperly denied the Miami license.
-Mark Wigfield; 202-828-3397; mark.wigfield@dowjones.com
Briefing Book for: QCOM |
