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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: Art Bechhoefer who wrote (19893)	3/4/2002 6:50:21 PM
From: pcstel	Read Replies (6) \| Respond to of 196654

Art: The whole mess is the fault of the FCC, which failed to write provisions into the bidding that would automatically return unpaid spectrum to the FCC (with a penalty, perhaps). This was an Auction set aside for "Entrepreneurial" bidding. That means "No Big Business", No Foreign Ownership interests above a certain threshold as consistent with FCC rules at the time. Auction 5 C Block provided "time payment options", all of which provided safeguards that guaranteed the FCC rights to recapture spectrum in which payments were not made! And the FCC did exactly that is several cases. These are licenses, they are not Nextwave's property. They are property of the US Govt. and leased to the Auction winners, as long as the covenants are upheld. If you lease a car, and file Bankruptcy. Do you get to keep the car that you leased? Of course not. It was never your car to begin with. The Supreme Court will simply clarify that these are simply regulatory approvals that are leased to the Auciton Winners! They are not owned by the winners, they are simply leased. When one license holder sells one of their authorities to another company. They do so using FCC Form 603. Question 3a states. 3a) Is this a pro forma assignment of authorization or transfer of control? They apply for approval of the FCC to transfer the assignment of authorization from one party to the next. Why, because they are simply leasing the right to use the spectrum from it's owner. The US Govt. And it's owner can decide if it will allow another party to lease it's property, or not. Regulator approvals are not the property of Nextwave. Nextwave violated the covenants surrounding their authority to use these spectrum grants, by not paying for them, and filing Bankruptcy. I think this will be very easy for the Supreme Court to decide! PCSTEL

To: Art Bechhoefer who wrote (19893)	3/4/2002 9:31:05 PM
From: saukriver	Read Replies (1) \| Respond to of 196654

If the FCC is treated differently than other creditors, then you will have a slew of regulatory agencies (EPA, FAA, PBGC, OHSA etc.) free to assert monetary claims against a debtor (under the guise of their regulatory power) whilst other creditors would be stayed. As a practical matter, that will result in judicial repeal of Chapter 11. Although an regulatory agency can exercise its police power for health, and safety reasons (e.g., even if in Chapter 11, unsanitary restaurant can be shut down) precisely nothing in Chapter 11 suggests that government claims for money are to be treated differently than other creditors' claims except as provided for the IRS (which has a priority for repayment) in the context of confirming a Chapter 11 plan. For example, Congress created a very particular carve-out from bankruptcy that allows State (not federal) licensing body to take actions regarding licensure of the debtor as an educational institution). That means a State can revoke fly-by-night school's license. Nothing similar for the FCC. So, the FCC must argue that somehow it is different under the Bankruptcy Code than other creditors because it licenses to the NextWave. But again, there is nothing to support a position that different treatment of government licensors is what Congress intended when it enacted Chapter 11. There are several provisions that prevent the change in property rights and/or contracts on the basis on a Chapter 11 petition or the financial condition of the debtor. Other licensors must wait to be paid from a Chapter 11 plan. Even the IRS is prevented from getting money from the Chapter 11 debtor. The Bankruptcy Code spells out that the IRS can audit, issue notices, demand tax returns, and assess taxes. But it cannot take collection steps which is essentially what the FCC is doing by purporting to revoke the licenses it granted to NextWave. I assume NextWave's argument will be that the FCC should beseech Congress, not the SC, if it wishes the Bankruptcy Code to be re-written. That said, this is a pure conflict between a federal regulatory scheme (the FCC) and a federal statute (the Bankruptcy Code) so it is not at all surprising that the SC took the case. There may be a strategy among the conservatives on the SC to drill home the point (to the extent it has not previously done so) that courts are not free to legislate.