Opinion: Whose Spectrum Is It?
By Rikki Lee
The latest episode in the ongoing, ill-fated C-Block PCS saga opened last week with the FCC's decision to "cancel"
NextWave Personal Communications Inc.'s licenses and auction the spectrum July 26. With this abrupt action, the FCC
exerted its spectrum authority. It moved against NextWave after an appeals court in November ruled that the licenses' value
could not be reduced, as previously determined by a bankruptcy court and upheld by a district judge.
The industry has stood firmly behind the FCC's latest pronouncement, although debates have sprung up on all sides whether
eligibility rules for the new auction should be kept intact. If companies other than "designated entities" are allowed to bid, some
say, this will undermine the commission's fundamental public policy of reserving the C and F Blocks for small businesses.
On the other hand, another argument goes that larger carriers might pay more for the licenses and put them to use more quickly.
CTIA and others even suggest that the 45-megahertz spectrum cap be lifted for the licenses; a similiar adjustment will occur
with the 746-806 MHz licenses.
But don't expect NextWave to roll over. The public notice was issued at the Wireless Telecommunications Bureau level.
Although NextWave may take the decision to the full commission, the firm likely might not find much compassion there.
Chairman William Kennard says that to allow the company to keep its licenses after defaulting on its payments "would
undermine the integrity of our auctions process."
NextWave says it offered to make good on its full payment of the original principal about three years before it would have
been duebut the FCC rejected it outright. The company has several high-rolling investors, including Liberty Media Corp. and
Global Crossing Ltd., which have pumped in more than $1.6 billion so NextWave can begin deploying a high-speed data
network.
On another battlefront, the parties may lock the spectrum in perpetual legal battles and away from the auction block for years.
This contingency might move the FCC to accept NextWave's deal, but the danger lies in the possible loss of the commission's
credibility. Then again, the ineffective way the commission has acted so far (including a proposed rendezvous with Nextel
Communications Inc.) has brought the FCC to this point of precipitous action; worrying about integrity now is too little too late.
There are lots of painful lessons from the C-Block mess. But whatever it eventually decides, the FCC must maintain the viability
of auctions. To avoid spectrum delays, the rules for all future auctions should spell out that bankruptcy is an automatic default
and licenses will be confiscated.
Nothin' But Wireless 'Net
Last week's America Online Inc.Time Warner Inc. gigamerger, in which the Internet service provider will become majority
partner, appeared to stun Wall Street analysts and media pundits. After all, how could the young Steve Case possibly become
Gerald Levin's or Ted Turner's boss? Yet after brief reflection, many agreed that the two companies might be a perfect
combination.
But look outsuch a grand-scale deal could appear on the wireless doorstep soon. This year, some believe, an Internet
company may merge with or acquire a wireless firm in a stock transaction. When you think about it, such a match-up isn't so
ridiculous: The price of many Internet shares is a multiple of some carriers' stock values. Microsoft Corp. already has current
partnerships with or investments in Nextel, Teligent Inc. and Winstar Communications Inc.
Just imagine the possible connections: Yahoo! Inc. might get bored with Sprint PCS and obtain a sizeable chunk of AT&T
Wireless Services in a union of two strong brands. Maybe content company Info-Space.com Inc. could acquire WebLink
Wireless Inc. for the latter's nationwide coverage. Because packaged factoids and e-mail have become the primary content
services for wireless devices, advanced messaging carriers seem the logical targets for "dot-com" companies.
But since we're going overboard, why not pick AOL and Nextel to merge as a launching pad for future wireless deals by Case
and company?
E-mail: rlee@cahners.com
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