Maybe this Tuesday. Interesting unanimous decision by DC District Court of Appeals Judges Sentelle, Tatel and Garland in the Nextwave vs FCC case. It looks like the Appeals Court is not afraid to tell a Federal agency that they have to follow Federal Law, like everyone else. I guess the Appeals Court is busy with other cases. I hope MSFT is next on the agenda.
There are some similarities in this case; the personal animus FCC commissioner Kennard is said to have had toward Nextwave. The way a government agency feels they are above the law; and that it has the right to take private property and put it up for sale to the public.
Another government agency out of control…
Basically, the Appeals Court said the FCC had no right to revoke the spectrum licenses that Nextwave had purchased for $4.7 billion. Nextwave was waiting for an FCC decision on the amount owed and thought the FCC would lower the amount due. Apparently Nextwave overpaid at the time of auction because previous and subsequent auctions bidders paid much less. (According to a subsequent ruling by Bankruptcy court; Nextwave had overpaid by $3.72 billion.)
However on June 8th, 1998 the FCC said only that licensees could give the licenses back. They also changed the repayment terms with the latest date for a payment being October 29, 1998. Nextwave filed for bankruptcy on June 8th; after hearing the FCC decision not to lower the amount due.
The FCC then revoked Nextwave’s licenses as they announced they would re-auction Nextwave's licence's to the public; even though Nextwave had not yet missed the late deadline to make payments and even though Nextwave said they would obtain a loan and would repay their debt. The FCC said, more or less- tough -you are too late. The FCC then proceeded to re-auction Nextwave’s licenses for $17 billion-almost four times what Nextwave had paid.
What it all boils down imo, is a US government agency- the FCC in this case- that has little respect for private property. They give and they take back. They make regulations and change them midstream. They believe their regulations trump conflicting Federal laws. And they act on behalf of competitors. The appeals court said that the FCC should have asked that successful bidders of licenses pay for the licenses in one payment. Then there would have been no creditor-debtor relationship. Because the FCC acted as a creditor by allowing installment payments, they were obliged to follow federal bankruptcy laws.
The Appeals Court decision said: ”Applying the fundamental principle that federal agencies must obey all federal laws, not just those they administer, we conclude that the Commission violated the provision of the Bankruptcy Code that prohibits governmental entities from revoking debtors' licenses solely for failure to pay debts dischargeable in bankruptcy. The Commission, having chosen to create standard debt obligations as part of its licensing scheme, is bound by the usual rules governing the treatment of such obligations in bankruptcy.”http://pacer.cadc.uscourts.gov/common/opinions/200106/00-1402b.txt
Ted Olsen argued for Nextwave. Ted Olson as the new Solicitor General will now be arguing for the Government. Interesting ... I am sure this matter is not over.
<<William Kennard, the former FCC chairman who ordered the licences seized, called on the two sides to settle the case, but lashed out at NextWave for pressing the case even after losing similar appeals in different courts: "By welching on its promise to pay the US overnment, Nextwave could walk away with billions.">>
Some say that Kennard had a personal animus for Nextwave. Kinda like Judge Jackson seemed to have towards Microsoft; or at least gave the appearance of bias against Microsoft. Kennard is now on the Board of Nextell. Joel Klein is now advising Bertlesman. I thought Bertlesman had some connection to EMI. Time Warner had planned on acquiring EMI but the EU prevented that merger as a condition for allowing the Time Warner-AOL merger, I think. ..Who would give better advice on preventing antitrust obstacles than one who imposed them previously.
According to a SI post: "Kennard the Clinton appointed head of the FCC during the former administration, was paid well by the industry for leading their fight against Nextwave. Kennard is now on Nextell's "legitimate" payroll." From SI: Message 15984982
Another SI post “Kennard's statement is remarkable in many ways. That Kennard would make it at all is the first surprise. His treatment of NextWave in contrast with his treatment of Nextel, would seem to cause a raised eyebrow at a minimum. And now that he is on the Nextel board, the other eyebrow might be raised. All in all, it would seem that he would have been well advised to not continue making his "fairness" (or more properly, lack thereof) with regard to NextWave so obvious again with the choice of the descriptive term "welching" in his statement when the FCC seems to have failed to notify NextWave in a proper and timely manner of its taking their spectrum from them even though NextWave appeared to be offering payment in full to the FCC during the bankruptcy proceedings.” Message 15986001 |
