Characterizing challenge to its licenses as “frivolous,” NextWave asked FCC Mon. to dismiss petition questioning its eligibility to receive PCS licenses returned to it last month by U.S. Appeals Court, D.C. In recent petition (CD July 20 p2), Alaska Native Wireless, Verizon Wireless and VoiceStream cited foreign ownership issues involving NextWave, its designated entity status and its financial qualifications to meet licensee requirements. NextWave told FCC that petitioners incorrectly labeled it as “applicant” trying to get back its C-block licenses. “No known legal standard requires NextWave to reapply for the licenses that were the subject of litigation,” NextWave said. “The FCC granted the licenses to NextWave in 1997 and the court’s unanimous June 22 decision returns them to the company by operation of law.” Carriers pursuing challenge all were successful bidders in FCC’s Jan. re-auction of PCS licenses, most of which had belonged to NextWave before Commission cancelled them for nonpayment.
Wireless Spectrum Auctions
The FCC manages and licenses the electromagnetic spectrum used by wireless, broadcast, satellite and other telecommunications services for government and commercial users. This activity includes organizing specific telecommunications modes to only use specific frequencies and maintaining the licensing systems for each frequency such that communications services and devices using different bands receive as little interference as possible.
What are spectrum auctions?
The FCC will periodically hold auctions of unused or newly available spectrum frequencies, in which potential licensees can bid to acquire the rights to use a specific frequency for a specific purpose. As an example, over the last few years the U.S. government has conducted periodic auctions of different GHz bands to support the growth of 5G services.
Five of PCS bidders that stand to lose most from U.S. Appeals Court, D.C., decision on NextWave urged FCC and Attorney Gen. John Ashcroft to reach “immediate settlement” that would keep results of $16.9 billion Jan. re-auction intact. Alaska Native Wireless, Dobson Communications, Salmon PCS, Verizon Wireless and VoiceStream called on Ashcroft, FCC Chmn. Powell and Office of Management & Budget (OMB) Dir. Mitchell Daniels “to achieve an immediate settlement of the NextWave litigation.” Proposal laid out in July 24 letter would need acceptance of both govt. and NextWave. Plan would take part of money due from winning re- auction bidders and pay it directly to NextWave in return for its dismissal of claims to 90 licenses. Rest of money from auction winners would be paid to federal govt. Citing $4.7 billion NextWave originally bid for licenses in 1996, carriers proposed $4-$5 billion as starting point for settlement talks. While plan wouldn’t keep entire $15.8 billion bid on former NextWave licenses intact as income for U.S. Treasury, carriers warned that uncertainty over D.C. Circuit ruling meant that “the delivery of that money to the Treasury is now farther away than ever.”
Members of House Telecom Subcommittee urged Defense Dept. and wireless industry Tues. to work out differences on 3rd generation wireless spectrum, although military top brass continued to raise red flags on relocation, reimbursement, timing. Verizon Wireless CEO Denny Strigl used hearing to call on Congress to weigh in on settlement solution for C-block spectrum returned by U.S. Appeals Court, D.C., to NextWave. On 3G front, Rep. Pickering (R-Miss.) said he planned to introduce bill “as soon as possible,” quipping that all spectrum was “on the table” except for bands occupied by MMDS and Instructional TV Fixed Services licensees. Subcommittee Chmn. Upton (R-Mich.) said he foresaw markup in Oct. time frame, despite differences that appeared to be keeping cellular operators and Pentagon apart. While much of panel appeared to be interested in finding ways to use DoD-occupied spectrum at 1.7 GHz for mobile Internet applications, several members questioned impact on national security and continuing military operations. Rep. Harman (D- Cal.), addressing Pentagon “skepticism” about ability of military to move, said, “I would not agree that the right answer is ‘We just can’t.'” She said: “I would suggest that more attention needs to be paid to how to make that transition effective.” Nearly 3-hour hearing, first this year on 3G, also focused on Enhanced 911 progress and need for lifting spectrum cap.
Commerce Secy. Donald Evans told FCC Chmn. Powell that with “additional time” NTIA should work with Commission to develop “a new plan for the selection of 3G spectrum.” Evans wrote: “The aim will be to build upon the good work already done and to develop and execute the new plan as quickly as possible.” Evans said he was asking that the work be done in coordination with other Executive Branch agencies, including National Security Council, National Economic Council (NEC), Office of Management & Budget, Defense Dept. Evans said in letter that he was urging participants to consider ways to “achieve flexibility” on statutory auction dates if flexibility was needed to implement plan. Letter appeared to be response to Powell letter last month outlining Commission’s plans to delay spectrum allocation decision for 3G that had been due this month under timeline set in White House executive memorandum last fall (CD June 28 p4).
Citing foreign ownership and designated entity status, Alaska Native Wireless, VoiceStream and Verizon Wireless have challenged eligibility of NextWave to receive PCS licenses returned last month by U.S. Appeals Court, D.C. Carriers filed petition at FCC Thurs. challenging C- and F-block license cancellation that Appeals Court had overturned. Petition said D.C. Circuit addressed only Sec. 525 of U.S. Bankruptcy Code, meaning it covered only FCC’s cancellation of NextWave’s licenses because of failure to make payments on them. “Nothing in the court’s decision precludes the Commission from determining not to reinstate NextWave’s licenses on grounds in combination with, in addition to or unrelated to, its failure to make timely installment payments,” petition said. Carriers challenging eligibility all were successful bidders in Jan. re-auction of C- block licenses, most of which had belonged to NextWave. Largest U.S. carrier Verizon was largest bidder, winning $8.8 billion in spectrum. Carriers called on FCC to “conduct an investigation and audit” on NextWave’s eligibility as part of license remand ordered by D.C. Circuit. They also want public comment on their petition and issues uncovered by audit.
Broadband deployment and swift resolution of NextWave spectrum issue were top agenda items Thurs. in discussions between Verizon Co-CEO Ivan Seidenberg and members of Congress, he told us in interview. Seidenberg said he was working Senate side of Hill to drum up support for broadband deregulation, which he said “has got to be the number one issue for our company.” He also said he would urge Congress “to show leadership” in NextWave case: “The government has to settle this thing… Make a business decision, move on and get the spectrum into the hands of the public.” With both Congress and FCC involved, it ought to be possible to “figure out a strategy,” he said.
Satellite industry considers itself big winner, for now, in FCC 2 GHz band order that licensed 8 MSS operators in spectrum coveted by cellular industry and New ICO for terrestrial use (CD July 18 p11). However, most agree Commission delay in deciding more-complex issue of how terrestrial and satellite companies might use spectrum still is “battle that must be fought,” satellite attorney said. Each of geostationary and nongeostationary systems will be authorized to operate in equal 3.5 MHz segments in 1990-2025 MHz and 2165-2200 MHz. Bureau said it was delaying full implementation of 2 GHz MSS licensing order with regard to an incremental 0.38 megahertz of spectrum per licensee in each band until it resolved various pending proposals. Remaining spectrum may be auctioned or given to cellular companies in future rulemaking, which industry observers believe could come in companion order with 3G spectrum allocation. Meanwhile, CTIA Pres. Tom Wheeler applauded FCC’s decision to not act, for now, on request by New ICO to develop terrestrial spectrum using bands allocated to MSS.
For 5th time, FCC Wireless Bureau postponed Sept. 12 auction of Ch. 60-69 spectrum in 700 MHz band Wed., but it said wouldn’t set new date until Commission acted on pending petitions for reconsideration. Auction delay covers 747-762 MHz and 777-792 MHz bands now occupied by analog broadcasters that don’t have to vacate band until 2006 or DTV penetration rate reaches 85%. Indefinite postponement marks first such delay under tenure of FCC Chmn. Powell. Way for delay was cleared in congressional budget resolution this year that addressed Bush Administration proposals for auction delays. Action came as industry and FCC officials increasingly acknowledged difficulty of clearing broadcasters from band by 2006.
Bush Administration is expected shortly to put forward delay in auction of 3rd generation wireless spectrum, Rep. Pickering (R- Miss.) told reporters Tues. Delay proposal, which has been backed by CTIA, wouldn’t affect other auction deadlines and would serve as “moratorium” to allow framework to be put in place to tackle issues on advanced wireless allocations, he said after Toffler Assoc. panel on spectrum allocation. FCC faces statutory deadline for putting proceeds from 3G auction into U.S. Treasury by Sept. 30, 2002. In June, FCC Chmn. Powell wrote to Commerce Secy. Donald Evans that more time was needed beyond July target date to make 3G spectrum allocation decision. House Commerce Committee hearing is planned in 2 weeks that will invite govt. policymakers on 3G, including top brass from Commerce, FCC, Defense Dept., NTIA. “We want to have all the stakeholders,” Pickering said. Meanwhile, DoD Acting Dir.-Spectrum Analysis & Management Rebecca Cowen-Hirscht repeated Pentagon’s continued hard line on relocation of military incumbents at 1.7 GHz, telling panel that more than money was needed to solve 3G problem.
NextWave CEO Allen Salmasi reiterated Fri. company’s plan to build out 3rd generation wireless network that would be carrier’s carrier, catering to mobile virtual network operators (MVNOs). While MVNOs have had success in Europe, with companies such as Virgin Mobile leasing network capacity to sell wireless products under their own brand, they haven’t taken off in U.S. yet. Salmasi said pent-up demand by companies interested in starting virtual wireless networks that hadn’t been able to cut deals with incumbents had generated “huge” interest in NextWave’s network buildout, which he said was expected to complete first phase within ambitious timeline of one year. “I can’t tell you how huge it is,” Salmasi said of interest expressed to NextWave so far from potential MVNO partners. Referring to European MVNOs, “you can assume that we are talking to every one of those brands,” Salmasi told us in interview Fri. These companies are “really trying to find a way to get into the U.S. and are willing to go out of the way to make equity investments,” he said.