New mobile wireless services are even farther from coming to market now that the Federal Communications Commission has decided to take a 5-year-old controversy over wireless licenses to the Supreme Court.
Some say the FCCs decision to ask for high-court review of NextWave Telecoms licenses is no more than posturing by the agency to secure a stronger negotiating position. Regardless of the outcome, the decision throws a wrench in plans to use the airwaves for enhanced wireless services.
“The FCC is making a further quagmire out of the spectrum picture,” said Larry Swasey, president of research firm Allied Business Intelligence. “They should be trying to get the spectrum into use, rather than following a bureaucratic path that puts some operators at a disadvantage.”
In June, an appeals court ruled that bankrupt NextWave still had rights to licenses that it won in a 1996 auction — the same licenses that the FCC reauctioned in January to Verizon Wireless and companies backed by AT&T Wireless and Cingular Wireless. Some of the recent winners have asked the FCC to settle with NextWave by letting the winners pay NextWave the price it bid, and then pay any extra that they bid to the FCC.
Last week, NextWave submitted a new plan for reorganization to the bankruptcy court and said it has secured $5 billion in financing. The company said that it has begun building its network and that it isnt interested in selling the licenses to the FCC or the new winners.
The FCCs decision last week to appeal the recent decision surprised many; some observers see it as legal jockeying. “The FCC, in order to be in a better position to negotiate with NextWave and the auction participants, needed to come from a position of strength. That would come from keeping the appeal going,” said Cary Mitchell, a lawyer representing some small businesses that won licenses.
In June, the appeals court ruled that the FCC cant rescind licenses when a winner doesnt pay. That point could be difficult for the FCC to refute before the Supreme Court because it is written into the law, said Brent Weingardt, a senior counsel who represents some license winners.
The FCC, however, said the Supreme Court should review the case because a future court could extend the recent ruling to mean that the FCC cant deny a license to a bankrupt company. “The possibility that a bidder will not ultimately be held to its bid subverts the process and turns bankruptcy into an auction strategy,” argued the FCC motion to stay the ruling because of its appeal.
The Supreme Court has declined to review previous FCC appeals regarding the NextWave case.
Verizon Wireless believes the Supreme Court isnt the FCCs best option. “We think any action that serves to confirm the results of [the reauction] needs to be deployed,” a Verizon Wireless spokesman said. “Our strongest preference remains direct settlement between NextWave and the government.”