In brief filed with U.S. Supreme Court late Mon., FCC argued that nothing in U.S. Bankruptcy Code that was at stake in U.S. Appeals Court, D.C., ruling on NextWave barred Commission from enforcing regulatory conditions on disputed PCS licenses. D.C. Circuit last June overturned FCC decision to cancel NextWave’s licenses for missed payment. Agency told court that D.C. Circuit’s ruling “needlessly places” Sec. 525 of U.S. Bankruptcy Code in conflict with Sec. 309(j) of Communications Act. Sec. 525 prevents govt. units from revoking license of debtor or bankrupt entity solely because it hasn’t paid dischargeable debt. Sec. 309 of Communications Act covers market-based mechanisms -- such as auctions -- that FCC can use to allocate spectrum. D.C. Circuit held that Sec. 525 barred cancellation of FCC license for failure to make timely payment of successful bid. “Because a winning bidder’s willingness and ability to pay more than others is the principal basis for the FCC’s decision to select it as the best licensee in the public interest, a licensee’s failure to meet that undertaking fatally undermines the regulatory judgment underlying the award of spectrum,” FCC said in brief. Auction rules and FCC licenses are conditioned on full and timely payments, Commission said. “Yet, under the Court of Appeals’ decision, the FCC cannot enforce that regulatory condition.” Sec. 525 of Bankruptcy Code doesn’t compel that result, agency argued. “The full and timely payment condition in FCC licenses does not discriminate against licensees that have been bankrupt or enter bankruptcy,” FCC told court. “It merely establishes a neutral regulatory requirement.” Agency said condition of FCC license that required licensee to meet regulatory bid obligations wasn’t debt that was dischargeable in bankruptcy. “To the contrary, the license condition is not even properly construed as a debt,” FCC said. “So long as the licensee holds its license, the terms of the license (including payment requirements) are beyond the authority of bankruptcy courts to modify or discharge.” Commission pointed to 2nd U.S. Appeals Court, N.Y., ruling on NextWave that held that bankruptcy courts lacked authority to modify or displace “full and timely payment” conditions that are part of FCC licenses. Bankruptcy courts haven’t “authority (let alone expertise)” to “second-guess” regulatory determinations that FCC makes on whether licensees have met payment obligations, brief said. Under D.C. Circuit’s ruling, Commission contended that “the use of competitive bidding would eliminate the FCC’s right to reclaim licenses for failure to meet fundamental license conditions specifically because the auction mechanism was used, i.e., because the regulatory decision to issue the licenses necessarily had a financial component.” Based on congressional decision to allow Commission to use market-based systems to allocate spectrum, that reading “represents a significant intrusion on the FCC’s ability ’to reclaim licenses.'”
Neil Bush, President Bush’s brother, visited NCTA convention Sun. to pitch his newest business scheme to cable operators. Speaking at early convention session, Bush, chmn.-CEO of Ignite, said his new company would introduce online, educational “courseware” in fall that would offer multimedia versions of middle-school textbooks. Designed to fully complement, not compete with, school curricula, Ignite’s customized courseware will cost $30 per child per subject. Bush, who raised $18 million in private capital to launch his company, plans to start with American history in fall, then expand course offerings to earth, life and physical sciences. Describing himself as “kind of a Pollyannic type of guy,” Bush said his online, multimedia textbooks would help teachers reach and motivate their students. “Our teachers are still using screwdrivers and sledgehammers,” he said. President’s brother urged cable to back his efforts by installing more high-speed data connections to schools and homes and supporting development of software and applications to fill broadband pipeline. “I think the cable industry has a huge potential role,” he said: “Build out the cable modem thing” and promote use of applications. Bush, who said he started Ignite for healthy mix of social responsibility and profit motives, projected that company “won’t be profitable for 3 years” and “won’t be dominant for 5 years.” He decried schools’ increasing reliance on standardized testing and assessments, even though his brother has been strong advocate of both, because he believes they favor memorization ability over thinking skills. But he said he wouldn’t press that case with President. “I made a point of not lobbying him,” Bush said. “He’s got his people.” -- AB
AT&T accused Qwest of “unlawfully offering long distance services” in its region in violation of Telecom Act’s Sec. 271 and conditions of its merger with U S West. In comments to FCC May 2, AT&T said “it is now clear that Qwest has engaged in a deliberate campaign” to offer prohibited long distance services and had failed to divest long distance operations when it acquired U S West. AT&T said sanctions should be imposed on Qwest because “scope and egregiousness of the violations” were unprecedented. AT&T’s comments stemmed from audit report and related complaints by Touch America, company that gained Qwest’s in-state long distance services at time of merger (CD Feb 6 p7). Touch America has charged Qwest with reclaiming long distance customers through service based on indefeasible rights of use (IRUs). Qwest spokesman said AT&T raised “no new or meritorious matters” in its comments to FCC and “it seems more than suspicious” that rival filed comments “right after Qwest filed in opposition last week to their merger with Comcast.” He said audit on which AT&T was commenting was done 2 months ago and Touch America’s complaint was several months old. As to accusations, he said “the FCC was aware at the time of the merger that Qwest sold IRUs and the practice would continue.”
FCC denied application by WB Holdings to modify frequencies satellite system is authorized to use for tracking, telemetry and control (TT&C) to include C-band frequencies. Commission said record lacked sufficient basis for waiver of rule that instructed domestic satellite operators to conduct TT&C operations within their allocated service bands.
Advanced Communications plans long-shot bid to get FCC to reopen case that denied fledgling DBS company extension of time to launch satellite system, CEO Dan Garner told us: “There is a lot of law and no justice.” Advanced filed petition last month to reopen case based on “previously unavailable” evidence. It said it never had opportunity to pursue remedies for order through discovery or depositions or otherwise present evidence on issues advanced in petition. It also asked FCC to stay proceedings on EchoStar takeover of Hughes Electronics and DirecTV until issue was settled because EchoStar and DirecTV ended up with spectrum from auction. Satellite attorney told us lawsuit was “desperate Hail Mary,” saying chances for success “were slim and none and slim had just left town.”
Arctic Slope Regional Corp., Council Tree Communications and VoiceStream argued in brief filed with U.S. Supreme Court Mon. that U.S. Appeals Court, D.C., “erroneously” allowed U.S. Bankruptcy Code to trump FCC’s “regulatory mission” in NextWave case. Carriers argued in intervening brief filed on side of FCC that D.C. Circuit allowed NextWave to keep licenses worth more than $15 billion, “which the FCC determined were not in the public interest for NextWave to hold.” U.S. appealed ruling by D.C. Circuit last year that essentially overturned FCC decision to cancel NextWave licenses for nonpayment. Decision led to FCC’s returning these PCS licenses to NextWave, upsetting results of re- auction of licenses that generated nearly $16 billion in bids. Carriers argued that D.C. Circuit allowed carrier under Sec. 525 of Bankruptcy Code to frustrate FCC’s regulatory duty “by the simple expedient of declaring bankruptcy.” Sec. 525 bars govt. units from revoking licenses of debtor or bankrupt entity solely because they haven’t paid dischargeable debt. FCC has argued that D.C. Circuit’s reading of Sec. 525 impedes market-based mechanisms for allocating spectrum set out by Congress in Sec. 309 of Communications Act. VoiceStream and other wireless carriers told high court Mon. that “Congress never intended for that bankruptcy provision to force agencies to grant exclusive licenses to entities that, like NextWave, fail to satisfy an express regulatory condition for holding a license.”
FCC temporarily waived duopoly and ownership rules to allow Viacom to acquire KCAL-TV (Ch. 9, Ind.) L.A. from Fidelity TV, it said in order released late Fri. FCC said acquisition didn’t violate voices test of local ownership rules, but Viacom would have to divest one of its radio stations. It also noted that national ownership limits had been stayed by court.
FCC should withdraw its cable modem declaratory ruling and refrain from rulemaking in any of 4 broadband proceedings until it has learned enough to propose single set of coherent and internally consistent rules that parties can address, American Public Power Assn. (APPA) said in filing. Commission’s NPRM doesn’t contain “terms or substance” of any proposed rules, nor does it give interested parties sufficient information to determine kinds, scope or topics of specific rules that agency may adopt, APPA said. FCC merely sets forth some tentative conclusions and asks questions about consequences of those conclusions, it said, and process falls short of rulemaking requirements under Administrative Procedure Act. There are 450 public power systems that operate communications systems capable of providing broadband services, APPA said, and it called for incentives and “assurances of protection” from state barriers to entry and predatory practices by incumbents in order for them to fill service gaps caused by bankruptcies of CLECs and overbuilders. APPA said it was concerned that Commission’s actions in broadband rulemaking proceedings could exacerbate predatory pricing and anticompetitive practices of incumbents.
FCC denied petition by KTFL Sacramento-Stockton for reconsideration of carriage complaint against EchoStar.
N.Y. PSC, pioneer in opening local phone networks to competition, warned FCC late last week that Commission’s broadband deregulation proposal could impede state agency’s often-heralded efforts. “New York’s progress in opening markets to competition could be impaired if the Commission prohibits unbundling for Internet access purposes,” PSC said in comments on FCC’s proposal to free Bell companies’ high- speed data services from interconnection and unbundling requirements. “We remain concerned that unless CLECs have access to ILECs’ facilities to provide high-speed Internet access, they will not be able to compete for local service,” PSC said. “The Commission’s tentative conclusion that the transmission component of retail wireline broadband Internet access, when provided over a carrier’s own transmission facilities, is an information service with a telecommunications component is incorrect.”