FCC to maintain small business criteria, but who knows what waivers it will issue:
Congress Eyed On DE Rule
By Caron Carlson
WASHINGTON--There they go again.
FCC Chairman William Kennard says small business criteria for the re-auction of NextWave Personal Communications Inc.'s
licenses will not change, yet larger players already are looking to skirt the restriction.
A hearing on the matter is tentatively scheduled before the Senate Budget Committee in early February.
Retaining the so-called "designated entity" rule and entertaining requests for waivers may be one way for the FCC to uphold the
letter of the law that set aside the C- and F-Block PCS spectrum for small business and at the same time permit deep-pocket
players to push up the bids. Sources say several companies applied for waivers last year, well before the re-auction was
planned, and giant SBC Communications Inc. was preparing a waiver request late last week.
An additional hurdle to the auction for most cellular and PCS operators is the 45 megahertz spectrum cap.
Worried that its members will be shut out of the bidding for the highly coveted spectrum while other big players might find a
way in, CTIA called for Congress to "clarify that there will be a fair and equitable re-auction process free from any special
FCC deals." Without naming Nextel Communications Inc., CTIA alluded to the exclusive licensing agreement the company
signed with the FCC's general counsel last Aug. 10.
"We have already seen, through legislation the FCC supported last year, they can and will support a sweetheart deal that allows
one company to acquire the licenses, and short-change taxpayers by selling the spectrum at less than market value," says Steve
Berry, CTIA senior vice president for congressional affairs.
A new law may be the most auspicious vehicle for settling the question. "Congress may be the only place that can very clearly
define a fair and equitable way to get this spectrum out there," Berry adds. Although passage of a law is highly unlikely to occur
before the scheduled July 26 auction, many in the industry see that date as fluid.
The entire debate over the designated entity rules may prove academic if NextWave succeeds in having the court overturn the
FCC's cancellation of its licenses. The company, which has tried since last summer to receive confirmation of its reorganization
plan, won a skirmish last week when the U.S. District Court for the Southern District of New York refused an FCC request to
temporarily stop the proceedings in the bankruptcy court. The FCC was ordered to appear before the bankruptcy court last
Friday to "show cause" why its cancellation of the licenses was legal.
Meanwhile, NextWave may ask the U.S. Court of Appeals for the Second Circuit, possibly this week, to rehear the case,
which it decided in favor of the FCC in November. "There are three to four fundamental legal issues that were raised by
NextWave and not addressed in the court's opinion," says Michael Wack, an attorney for NextWave. "The FCC has made it
clear that rather than accept full payment on an accelerated basis and put the licenses into productive use, it would prefer to
litigate."
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