Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Nextwave Telecom Inc. -- Ignore unavailable to you. Want to Upgrade?

To: waitwatchwander who wrote (821)	9/29/2002 7:04:55 PM
From: kech	Respond to of 1088

more on the legal issues telephonyonline.com

To: waitwatchwander who wrote (821)	10/8/2002 4:54:21 PM
From: waitwatchwander	Respond to of 1088

High Court Justices Question FCC Authority to Auction Mobile Licenses Tuesday October 8, 3:15 pm ET By Mark Wigfield Dow Jones Newswires WASHINGTON -- Did the government do it just for the money? That was the question on the minds of several Supreme Court justices Tuesday as they heard arguments about whether the Federal Communications Commission had the right to reclaim valuable mobile telephone licenses from privately-held NextWave Telecom Inc. even though it was protected from creditors by filing for bankruptcy. "Each point where the FCC made a decision, it was an economic decision, not a regulatory decision," said Justice David Souter. That's a key issue in the long-running case over whether the FCC's authority to auction mobile-phone licenses is trumped by a provision of federal bankruptcy law. Section 525 of the bankruptcy code prevents the government from revoking a license solely because the bidder didn't pay a debt that can be discharged in bankruptcy. But the FCC has argued that the $4.7 billion owed it by NextWave from the 1996 auction is only a proxy for the agency's broader concerns in managing the nation's spectrum. Using that argument, the FCC reclaimed NextWave's licenses and re-auctioned them in January 2001 for $16 billion. Now, the continuing legal quagmire has led re-auction winners like Verizon Wireless, a partnership between Verizon Communications Inc. and Vodafone Group PLC to request that their bids be canceled. Verizon bid $8.7 billion in the re-auction. Arguing for the FCC, Acting Solicitor General Paul D. Clement faced intense questioning from the nine justices. The payments owed by NextWave sent a " regulatory signal" that the company wasn't the best-qualified operator, he said. But he tried to show that failure to pay wasn't the sole trigger of the license revocation, noting that the agency extended its deadline for payment for a year and restructured the debt for some bidders. Waiving the payments "would be out of place in a regime where money is the only purpose," Mr. Clement said. Other reasons for canceling the licenses include the fact that NextWave wasn't providing service, the spectrum remained unused, and other companies "stood ready to do it." But Justice Antonin Scalia said regulators "can always find a regulatory purpose" for what they do. "It's the easiest thing in the world." Justice Souter added that if the FCC treated NextWave's debt as a principle reason for revoking the licenses, "I don't see how you can proceed." Only Justice Stephen Breyer seemed to offer a defense of the FCC's position that Congress may have intended some exceptions to the bankruptcy law's prohibition on license cancellation. It's up to the courts, he said, to interpret the laws so they make sense. "No animals in the park doesn't apply to a pet oyster," he said. Likewise, there would be "no way the government can collect its money" if the bankruptcy law is interpreted so literally. Justice Anthony Kennedy said the FCC is now using an auction to decide who gets spectrum, whereas before the agency made the decision itself. Mr. Clement responded that that agency had only partially relinquished its authority. The court had fewer questions for Laurence H. Tribe, an attorney for NextWave creditors, who has been before the high court many times in the past. NextWave's creditors, which include Sony Corp. , Qualcomm Inc. (NasdaqNM:QCOM - News) and others, need the certainty provided by the bankruptcy law in order to invest billions in an auction, Mr. Tribe said. Auctions rely on the ability of companies to raise capital, Mr. Tribe said. And companies won't be able to raise capital if investors know that attempts to reorganize from bankruptcy can be frustrated by the FCC. NextWave attorney Donald Verrilli argued that there is no conflict between communications and bankruptcy law, as the FCC has argued. Instead, there was a conflict between bankruptcy law and the rules of the NextWave auction. The NextWave auction was unique in that it allowed companies to pay their bids on an installment plan over 10 years, instead of all at once. The policy was meant to accommodate small, upstart businesses with less access to capital. The FCC has abandoned that policy in the wake of the NextWave debacle. But Jonathan Franklin, an attorney for other winning bidders in the re-auction like Arctic Slope Regional Corp., which was backed by AT&T Wireless Services Inc. and VoiceStream Wireless Corp., argued that the NextWave precedent could spread. Several months typically intervene between the close of a spectrum auction and actual award of the licenses. Under NextWave's rules, "the FCC would have to grant the license to a winner who declares bankruptcy the next day," Mr. Franklin said. The FCC has asked Congress to give the agency the power to trump bankruptcy law in auction disputes. But Congress has repeatedly rejected that idea. Justice Ruth Bader Ginsburg probed that point, but was told by Mr. Franklin that no exception is needed in the law for the FCC because it is "undisputed" that the agency has valid regulatory purposes in spectrum auctions. A decision could come as early as the end of the year, or by June 2003 at the latest, when the current Supreme Court term ends. But that won't be the end of the saga, because the Supreme Court is likely to send the case back to the FCC or U.S. Court of Appeals to resolve other issues. -Mark Wigfield, Dow Jones Newswires; 202-828-3397