LEGISLATION IN WORKS TO BACK UP PENDING NEXTWAVE SETTLEMENT
Administration has ironed out proposed legislation that would reinforce terms of pending NextWave settlement agreement, on PCS licenses expected to be announced in matter of days. Draft of legislative language obtained by Communications Daily outlines proposed terms of pending agreement, including timing in which NextWave would receive $9.55 billion by Dec. 31, 2002. At that time, it immediately would pay $3.05 billion in federal taxes. Draft lays out payment road map in which govt. would be paid before NextWave, although carriers could pay after June 30, 2002, following FCC completion of all regulatory steps needed to award licenses. Draft appears designed to address concerns raised by Sen. McCain (R-Ariz.) last week on risk that settlement funds would be paid out by govt. before full agreement was final. Draft bill describes in detail how federal courts would be directed to handle any legal challenges involving disputed spectrum on expedited basis. Under settlement, govt. would be paid $10 billion and NextWave $6 billion, not counting all of its tax obligations (CD Oct 29 p1).
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Legislative vehicle to which language will be attached wasn’t clear late Thurs., although Defense Dept. appropriations bill was seen as strong possibility by one source earlier this week (CD Oct 30 p6). Administration officials are to take lead in outlining terms of proposal on Capitol Hill, but only after settlement itself has been finalized, sources have said. Final legal documents on settlement terms are expected to be completed as early as today (Fri.), although announcement may not come until early next week. Meanwhile, lobbyist heavyweights such as former Republican National Committee Chmn. Haley Barbour have been lined up by large carriers involved in settlement to make case for legislation on Hill, source said.
Under legislative proposal drafted this week, bill would authorize $9.55 billion, which Nextwave would be paid by Dec. 31, 2002. One condition of agreement is that settlement approval order be finalized by that date, which would mean it would be “no longer subject to further review.” Under settlement, NextWave would relinquish its claims to PCS licenses that FCC returned this summer, after U.S. Appeals Court, D.C., overturned results of Jan. re-auction of those licenses. FCC then would grant licenses to each settlement participant that had won licenses in Jan. re-auction after full payment. Winning bidders that provided letter of credit to govt. would be entitled to refund of 50% of deposits they already had paid to participate. Successful re-auction bidders had made down payments totaling 20% of $15.8 billion that Nextwave licenses had fetched, so govt. already has $3 billion of those upfront payments. Letters of credit are seen as “same as cash” tool that ensures that govt. will be protected against default and will receive promised payments.
Full payments are due within 10 days after FCC completes regulatory steps needed to grant licenses to winning bidder, although they wouldn’t be due before June 30, 2002. Carriers have been seeking some lead time to tap capital markets or otherwise arrange financing. Draft legislation says settlement agreement would allow any winning bidders to pay for -- and receive -- licenses earlier, if they chose.
On issue of expedited judicial review, proposal would require that any legal challenge to licenses under agreement could be brought only in D.C. Circuit. For example, any challenge to FCC order approving settlement agreement would have to be made under petition for expedited review within 10 days of public notice. Most recent version of draft bill would direct D.C. Circuit to advance such proceedings on its docket “to the greatest extent possible.” Intent would be to decide such cases within 45 days after last petition or appeal had been filed. Any petition for rehearing of D.C. Circuit ruling also would be dealt with on accelerated basis, designed to resolve challenge within 20 days after petition was filed “if practicable.” Such expedited provisions also would apply to U.S. Supreme Court. Appeals to high court of any D.C. Circuit decisions would have to be made within 10 days of lower court ruling. Supreme Court would be exhorted to act on any petitions for certiorari within 30 days after they were filed. If Supreme Court decided to review any D.C. Circuit ruling, it would hear appeal and issue order within 70 days of justices’ agreeing to take case.
McCain had warned last week in letter to Senate Majority Leader Daschle (D-S.C.) and Minority Leader Lott (R-Miss.) about loss of spectrum revenue from expected settlement over NextWave licenses. He said NextWave had defaulted on more than $4 billion in payments that had been due to federal govt. and could walk away from deal with at least $5 billion. He said lost revenue from nearly $15.8 billion that NextWave licenses had received in re-auction could be used to fund fight against terrorism. He also cited press reports that Verizon Wireless could delay until May 31, 2002, making partial payment of $8.5 billion it had bid. (Earlier in settlement discussions, Verizon Wireless reportedly had been backing 2-part payment process, although such provisions since have been changed to one-time payments). McCain said taxpayers “deserve” agreement in which settlement funds were paid by participants before govt. doled out funds. Under draft legislation, NextWave would receive its money by Dec. 31, at which point govt. already would have been paid, source said Thurs.