To: Kenneth V. McNutt who wrote (23645 ) 3/2/1999 2:40:00 PM From: Ruffian Respond to of 152472
Ruling Bad For GSM> From the March 1, 1999 issue of Wireless Week Pocket Ruling: Bad For GSM? By Edward Warner WASHINGTON--A federal judge's decision last week makes it unlikely that 30-megahertz global system for mobile communications networks will launch in Chicago, Dallas, New Orleans or Las Vegas. The ruling by Judge Stephen Derby prevents Pocket Communications Inc. from immediately selling its 12 licenses to raise cash to resolve its Chapter 11 bankruptcy. A sale can only go through after Derby's ruling is reviewed by an appeals court, which may take months. Derby said Pocket could retain its licenses, but rejected an effort by Pocket's four chief lenders to give the licenses back to the FCC to better the lenders' chances of winning a lawsuit against the commission. The lenders include GSM manufacturers Ericsson Inc. and Siemens, which earlier failed to buy Pocket's licenses directly from the FCC and are suing the commission over those talks. Had the lenders prevailed, the licenses would not have been included in the upcoming personal communications services re-auction, Derby said. The March 23 sale involves forfeited licenses, including 15-megahertz licenses in Chicago and Dallas; Pocket retained only 15 megahertz of its spectrum in those cities. By rejecting the lenders' proposal, Pocket's existing deal for resolving its debt to the FCC remains. Under the agreement, Pocket will return all but 12 of the 43 PCS licenses it won in the C-Block auction and, in return, it will gain forgiveness of the $1.2 billion it owes the FCC for the licenses. Pocket Chairman and CEO Dan Riker said he had a buyer for all 12 properties, including the 30-megahertz licenses for Las Vegas and New Orleans, markets that also lack GSM carriers. The judge withheld implementation of his decision pending resolution of the appeal he expects the lenders will file. The decision was a victory for the FCC's program for resolving C-Block auction debts. It contrasts with the 1998 ruling of a Dallas bankruptcy judge who reduced another C-Block winner's debt by 80 percent but allowed it to keep its licenses. The FCC last week released the list of 102 prospective bidders for the re-auction, half of which submitted incomplete applications that they must revise by March 3. In the re-auction, some PCS operators are bidding under other names. Powertel is backing a prospective GSM carrier, Eliska Wireless. However, Derby's decision may make it harder for others in that small-business-only auction to garner financing from larger businesses such as operating GSM carriers. By refusing to let Pocket's key lenders have their way, he may have undercut lenders' general confidence in their ability to control a PCS investment.