Carriers Petition FCC to Return Down Payments

In the latest chapter of a wireless spectrum drama, several wireless carriers on Friday petitioned the Federal Communications Commission to return the down payments they made in a January 2001 auction of wireless spectrum that they may never receive.

In 1999, NextWave Telecom Inc. filed for bankruptcy, and the FCC revoked spectrum licenses that NextWave had won in a 1996 auction. The agency reauctioned the licenses in January 2001 to several other carriers, realizing a far larger profit than it did with the first auction. Verizon Wireless, VoiceStream Wireless Corp. and Alaska Native Wireless LLC, which is backed by AT&T Corp., paid nearly $17 billion for the spectrum. But in June of 2001, a federal appeals court ruled that the FCC had violated bankruptcy laws and that NextWave should keep the spectrum.

Since then, the carriers have been trying to figure out a settlement deal that will appease the bankrupt NextWave, the other carriers and the FCC. The parties had hoped to receive congressional approval by Dec. 31 for a proposed settlement plan in which the carriers would pay $6 billion to NextWave and $10 to the government, and NextWave would relinquish the spectrum.

But Congress has yet to approve any sort of settlement. In the meantime, the carriers say they are losing money, including the interest they could be receiving on the money they already put down when they bought the reauctioned spectrum.

“As the Commission is aware, Congress did not pass such legislation, thus causing the settlement to terminate,” said the carriers in the petition filed to the FCC. “As a result, the time has come for the Commission to return to the Auction … winners their more than $3.1 billion in down payments, which the Commission has held interest-free since February 2001, at a cost to the Auction … winners of at least $430,000 a day and a total of at least $140 million through the date of this petition.”

The carriers added in the petition that preauction public notices from the FCC said that the FCC would return payments made by winning bidders if licenses were later determined to be unavailable due to a subsequent court action.