BANKRUPT AIRADIGM AWAITS FCC DECISION ON C-BLOCK LICENSES

Airadigm and NextWave have been treated similarly by Commission insofar as both are C-block licensees that missed installment payments while in bankruptcy, Airadigm has told FCC in recent filings. But Little Chute, Wis.-based Airadigm, which offers service under name Einstein PCS, is significantly different from NextWave, said William Cardell, Washington attorney representing Airadigm. NextWave proceeding is dealing with “bare licenses” because carrier never provided service to anyone before it defaulted on its payments, he said. Airadigm, which is partly owned by Oneida Nation, is providing service to 30,000 subscribers, including customers on tribal lands and traditionally underserved rural areas, Cardell said. “When the FCC looks at that they will have to ask whether it is in the public interest to shut these people off or to let these people continue operations,” he said. “NextWave never petitioned for the kind of relief that we are asking for,” he said. “NextWave never asked to continue to provide service because they are not providing service.” Timing of Airadigm decision in context of NextWave litigation proceedings is “immaterial,” Cardell said. “The issues at stake in the NextWave litigation have no bearing.”

Airadigm petition, for which FCC sought comments last March, centers on automatic cancellation of its PCS licenses. It asked Commission for one of 2 things: (1) Emergency petition for reinstatement of licenses. (2) Or waiver of automatic cancellation of its C- and F-block licenses. Commission is widely expected to have to address issue of process for cancelling licenses and related operating restrictions after this occurs. In recent filing in D.C. Circuit, FCC said it hadn’t yet made decision in Airadigm case and that factors in case included service on tribal lands and public safety operations.

“An Airadigm decision could somewhat undermine our position in the NextWave case,” FCC official said. “I would say that’s the big fear.” But source said issue was one of substance rather than timing, because even if agency made decision following NextWave oral argument, relative treatment of 2 carriers would be compared, even though some circumstances were different. NextWave’s cancelled licenses constituted largest part of C-block licenses that FCC auctioned last month to generate record-setting revenue of $17 billion. Outcome in D.C. Circuit has implications for that auction, results of which are contingent on court’s not ruling in favor of NextWave. Meanwhile, Airadigm’s licenses still are listed in FCC’s universal licensing system database as “active.”

NextWave Deputy Gen. Counsel Michael Wack saw more similarities than differences between 2 carriers. “NextWave supports Airadigm’s efforts to retain its PCS licenses and stay in business,” he said. “We have informed the Commission and the court that the FCC is obligated to treat similarly situated companies like NextWave the same way as it treats Airadigm.” NextWave has cited different fate of Airadigm in recent filings to D.C. Circuit. “The Commission contends that ‘auction integrity’ required it to refuse NextWave’s offer of full payment and reauction the spectrum, yet despite ‘auction integrity’ the Commission has still not denied the request of Airadigm for a waiver of cancellation,” NextWave said, reiterating concerns that it was scapegoat for outcome of C-block auction.

Some carriers intervening in NextWave case on behalf of FCC have asked Commission to provide more time to comment on Airadigm’s petition for reinstatement. In ex parte filing last month, carriers said that since cycle for comment on Airadigm petition ended last year, events in NextWave case have changed substantially. Carriers said Airadigm relied on U.S. Bankruptcy Court ruling in NextWave case to contend its licenses should be reinstated because it was protected by automatic stay of Bankruptcy Code when it missed installment payment. Carriers said NextWave backed Airadigm’s filing, arguing that any waiver given to Airadigm should be applied broadly. Carriers also said 2nd U.S. Appeals Court, N.Y., had reversed bankruptcy court decision, ruling license cancellation wasn’t protected by automatic bankruptcy stay because FCC had acted as regulator, not debtor. Because court activities occurred after Airadigm comment period closed, “it is imperative that the Commission ask for a new round of comments before rendering any decision,” carriers said. While ex parte filing didn’t indicate which of NextWave intervenors backed request for more time, intervening companies include AT&T Wireless, BellSouth, CTIA, Dobson Communications, Sprint PCS, Verizon Wireless. With exception of Sprint PCS, other private companies in group are among largest winners in latest auction.

In subsequent ex parte filing, Airadigm said its petition for reinstatement didn’t rely on arguments that automatic stay in bankruptcy applied to C-block installment payments. Petition “specifically concedes for the sake of argument that the stay does not apply and that licenses automatically cancel upon nonpayment: ‘Reinstatement’ is necessary only if licenses have in fact been cancelled,” Airadigm said. “Airadigm’s claim to relief does not depend upon any ruling in the NextWave case.”

“Further delay would be harmful,” Airadigm told FCC. Verizon Wireless and Sprint PCS have started to offer service in part of Airadigm’s licensed area in last few months, carrier said. “Their salesmen have not hesitated to inform prospective Airadigm customers that Airadigm’s licenses have been cancelled,” it said. “Airadigm has had difficulty attracting and retaining employees during this period of prolonged uncertainty -- people are understandably reluctant to stake their careers on a company whose short-term prospects are in real doubt,” it said. Delay has taken “significant toll,” it said.

FCC reinstatement of Airadigm’s licenses in Wis. and Iowa also is key to completion of agreement by TeleCorp PCS and Telephone Data Systems (TDS) to buy bankrupt carrier’s assets. In Nov., bankruptcy court approved collective plan of financial reorganization under which TeleCorp and TDS plan to underwrite Airadigm’s debt obligations, TeleCorp said in SEC filing. TeleCorp said it “will receive disaggregated licenses for its consideration.” But sale of those licenses hinges in part on “reinstatement of those licenses by the FCC,” it said. Airadigm licenses also came up when largest AT&T Wireless affiliate TeleCorp bought Tritel, 2nd largest affiliate, last year for $5.3 billion. Combined company acquired right to acquire additional wireless properties from Airadigm.

Airadigm has said it was one of only 9 original C-block PCS operators to have established operating phone company. Company was first nonpioneer’s preference PCS licensee to begin offering service. When company originally filed for reorganization in U.S. Bankruptcy Court, Madison, Wis., Ericsson, FCC and Oneida Nation were named. At the time, Airadigm said it owed $10 million to tribe and $60 million to FCC for 13 licenses. Einstein PCS service was founded in March 1997. Among early operations of Airadigm was provision of public safety operations for Oneida tribe in Wis. so its police force could have mobile communications for first time.