Conspiracy Theory

So much for the American dream. Individuals who won licenses in the wireless auction ending in January are disgusted with the government.

So much for the American dream. Individuals who won licenses in the wireless auction ending in January are disgusted with the government. They think the auction process has been so crooked that its fodder for a Hollywood movie.

Vince McBride and Scott Reiter, each with dreams of opening their own small wireless businesses, won licenses. But theyve seen nothing in return for the $306,000 and $200,000 they handed over to the Federal Communications Commission respectively and are so enraged that theyre seeing conspiracy everywhere. McBride and Reiter won licenses originally won by NextWave Telecom in 1996. But a court recently ruled that NextWave still has rights to those licenses, even though the FCC reauctioned them. Its not clear yet who will end up with the spectrum.

Some of the connections that McBride and Reiter make are mighty suspicious. Take NextWaves former lawyer, Ted Olson, for example. He was named U.S. solicitor general after representing Gov. George W. Bush in the Supreme Court case resulting in Bush being declared the winner of the presidential election.

McBride and Reiter fear that its unlikely the FCC will appeal the ruling to the Supreme Court because the determination to make such an appeal would be made by Solicitor General Olson. Even if Olson were asked to allow someone else to handle the case, McBride suspects it would be someone influenced by Olson.

They also think that former FCC Chairman Bill Kennards connection to Nextel Communications is fishy. The FCC tried to make a backroom deal that would allow Nextel to buy NextWaves licenses, without offering other companies the same chance to buy them. That deal would have involved the FCC granting waivers excusing Nextel from small-business regulations attached to the licenses. When Congress found out, it put a stop to it. Now Kennard sits on Nextels board.

They also wonder about what exactly happened with Allegheny Communications. The company filed a lawsuit prior to the auction against Alaska Native Wireless, which is backed by AT&T Wireless and Salmon PCS, which is 85 percent owned by Cingular Wireless. Allegheny claimed those companies broke the rules that qualified them as small bidders because they had backing by such heavy hitters. But Allegheny settled with the companies and didnt end up winning any licenses.

Every auction has its conspiracy theories. In the original 1996 auction, George Schmitt, then head of Omnipoint Communications, once shared a rumor that Michele Farquhar, then head of the FCCs wireless bureau, was told by Vice President Al Gore to ignore foreign ownership limits on companies that were being invested in by the same Koreans financing his campaign.

Ironically, reports have surfaced that the FCC may revisit allegations that NextWave violated foreign ownership rules in 1996, a case that was settled between bickering companies, but never endorsed by the FCC.