From the November 22, 1999, issue of Wireless Week
Spectrum License Issue Hanging Fire
By Caron Carlson
WASHINGTON--The omnibus budget bill is often called the "Christmas tree bill" because officials try to hang last-minute
riders on its branches and hope the whole package passes.
But this holiday season, the White House may not get its wish to reclaim the bankrupt Next-Wave Personal Communications
Inc.'s spectrum licenses for the FCC. At deadline, a version of the bill without a spectrum provision was headed to the House
of Representatives for a vote.
The White House campaign to reclaim NextWave's spectrum licenses for the FCC through budget legislation culminated last
week in a battle of political wills, in which allegations of past and present Administration favoritism toward Nextel
Communications Inc. surfaced. In the midst of the battle, CTIA lofted its own alternative C-Block PCS re-auction proposal.
Congressional leaders continued to speak out against the attempt to use spectrum as a tool for balancing the budget, but fears
persisted in the industry that the provision could be swept into a final attempt at compromise before adjournment. The
11th-hour machinations that held spectrum policy hostage to budgetary concerns are common practice as budget legislation
approaches a vote.
In a press conference early last week, majority leader Richard Armey, R-Texas, said the case of NextWave's spectrum is not
about money but about the rule of law. The court decided the FCC had made a fraudulent conveyance to NextWave, he said,
and the Congress should not relieve the government of the consequences of that judicial decision. "I don't think you can let
something [go] that goes to the very heart of the government itself--complying with the rule of law that it itself makes--and say,
'well, that is really not about that, it's about money,'" Armey said. "It's about something far greater than money."
Up against a White House that appeared doggedly determined to balance the budget by almost guaranteeing a spectrum
windfall to Nextel, however, CTIA drafted an alternative that would enable its members to bid for NextWave's licenses in the
event of an auction. "Our preference was that we didn't want any spectrum language in the [budget] legislation," said Steve
Berry, CTIA's senior vice president for congressional affairs. "Faced with the question: Do you want the Nextel language or
do you want something else? We came up with something else."
But PCIA blasted the proposals to auction off NextWave's spectrum, maintaining that they'd hurt competition. "Under the
proposals we've seen, small businesses are effectively denied any opportunity to compete for the spectrum," President Jay
Kitchen said in a press statement. "The rules for the C-Block auction were created so that small and entrepreneurial
companies could establish a foothold in the PCS market."
One of the more questionable aspects of the administration's proposal was its exclusive applicability to just two
companies--NextWave and Nextel. While the proposal did not name either company, it was narrowly crafted, all but
eliminating the possibility of any other party falling under its jurisdiction. It did not create new telecommunications policy or
improve the regulatory process for the industry as a whole, but instead appeared only to ensure the transfer of assets from one
company to another.
CTIA's alternative draft would authorize the FCC to re-auction all C- and F-Block PCS licenses subject to bankruptcy
proceedings. Also, unlike the administration's proposal that suggests auctioning NextWave's spectrum en masse, CTIA's
would require the FCC to auction the individual licenses.
More importantly to CTIA's membership, the alternative draft would include them as potential competitors to Nextel in a bid
for the licenses. It would permit existing cellular and PCS licensees to bid by lifting the spectrum cap for this auction alone.
What's more, it does not include the administration's proposal for a rapid-fire, court-sponsored auction and minimum bid of
$3.5 billion, which together would eliminate all companies without large cash reserves.
"If you kept these restrictions, there are only a few people could bid," Barry said. "Nextel would walk away with those
licenses for a song because no one else could compete with them."
House Commerce Committee Chairman Tom Bliley, R-Va., and Tele-communications Subcommittee Chairman Billy Tauzin,
R-La., joined Armey in continued opposition to any spectrum language in the budget, an aide to Tauzin said. "All three agree
that the administration should not be allowed to reclaim spectrum involved in a bankruptcy proceeding," the aide said.
"Companies that went bankrupt went bankrupt through no fault of their own, and the federal government has to shoulder some
of the blame." |
