VERIZON WIRELESS ASKS D.C. CIRCUIT TO ENFORCE NEXTWAVE RULING
In new effort to get FCC to return billions in NextWave re-auction deposits, Verizon Wireless asked U.S. Appeals Court, D.C., Tues. to “compel full compliance” with ruling that overturned FCC decision to cancel NextWave’s licenses. “Because the cancellation of NextWave’s licenses was unlawful, the re-auction itself was without lawful basis,” Verizon said in petition. “For the same reason, any continuing obligations on the part of the NextWave re-auction winners were also necessarily extinguished by this court’s ruling.” In Jan., re-auction winners petitioned FCC to refund $3.1 billion in down payments they said agency had been holding without interest since Feb. 2001. Verizon Wireless and 12 other carriers said that because settlement agreement on NextWave’s licenses expired Dec. 31 without Congress’s approval of settlement, agency should return money. Verizon’s latest request to D.C. Circuit came in wake of carriers’ expectations that Commission wasn’t planning to return deposits until after Supreme Court decided whether it would hear oral argument in NextWave case (CD Jan 30 p1). Verizon Wireless told court FCC’s refusal so far to “implement this court’s mandate” and return deposits meant carrier had lost more than $80 million in unpaid interest on its $1.7 billion down payment.
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In June 2001, D.C. Circuit reversed FCC’s decision to cancel NextWave’s licenses for missed payment, ruling Verizon Wireless said invalidated Jan. 2001 re-auction of NextWave’s licenses. Verizon said FCC had refused to implement mandate of court that it violated Sec. 525 of U.S. Bankruptcy Code by cancelling certain of NextWave’s licenses. “This court’s decision destroyed the essential basis for the Commission’s re-auction of the same licenses because the Commission could not re-auction what it did not lawfully have,” Verizon said. Its filing came after Verizon Wireless withdrew petition to U.S. Supreme Court that had sided with FCC in seeking review of D.C. Circuit ruling on NextWave (CD Feb 5 p7). Instead, Verizon told court Fri. it still disagreed with appellate court’s decision, but public interest “in putting the spectrum to use, rather than letting it lie fallow, is better served by quickly obtaining certainty in ownership of the NextWave licenses.”
In Tues. filing, Verizon Wireless argued FCC’s “refusal to implement this court’s mandate causes substantial harm that is exacerbated with each passing day.” Verizon Wireless, joint venture of Vodafone and Verizon, is losing $250,000 in daily interest “wrongfully withheld by the Commission.” That means carrier is “hampered making alternative arrangements to expand its business by the debilitating cloud of a contingent liability of $8.7 billion for licenses that the Commission does not have and will not get back for years, if ever.” Carrier argued FCC had to give “full effect” to all parts of court’s mandate, “including any necessary implications.” Court can bar agency from taking action that “evades or frustrates” effect of its mandate, carrier said. “Both situations are presented here, and accordingly, the court should direct the Commission to return in full the down payments that Verizon Wireless made for the unlawfully cancelled NextWave licenses and to refrain from taking any action to enforce against Verizon Wireless any obligations that rest on an auction that this court has already declared was contrary to law.”
Overhang of $8.7 billion that Verizon Wireless bid on NextWave licenses in re-auction is “substantial” in relation to deposits’ not having been returned, carrier argued. While losing interest on $1.7 billion deposit, it “has received nothing in exchange -- no right even to a limited use of the licenses,” it said. Verizon said it would continue to lose $1.5 million for each additional week that Commission kept down payments. In some markets, Verizon said it would have to obtain spectrum from other sources to replace unavailable NextWave licenses. Elsewhere, Verizon Wireless said it would have to deploy “expensive equipment” to make up for lost capacity that would have been covered under NextWave licenses. Carrier said it was hampered in taking advantage of other business opportunities as long as its $8.7 billion contingent liability to Commission existed.
Meanwhile, Alaska Native Wireless and VoiceStream continued to press FCC to reconsider its decision to reinstate NextWave’s PCS licenses. In filing Mon. at FCC, they argued agency’s Wireless Bureau should have opened proceedings to investigate NextWave’s qualifications before reinstating licenses. VoiceStream and Alaska Native Wireless (ANW), which has financial backing from AT&T Wireless, asked FCC Mon. to hold NextWave’s licenses to “avoid prejudicing the interests of any single party,” citing “competing claims” that parties to re-auction were pursuing, including: (1) Pending FCC petition for certiorari at U.S. Supreme Court asking high court to review D.C. Circuit’s NextWave ruling. (2) Claims by ANW and VoiceStream on eligibility of NextWave to hold licenses. (3) FCC’s continued retention of re- auction winners’ down payments. (4) NextWave notification to FCC of its efforts to build out spectrum for some of licenses at issue. ANW and VoiceStream originally filed petition at FCC last Aug. asking agency to deny reinstatement of NextWave’s PCS licenses and contending that $2.5 billion investment agreement by UBS Warburg gave banker de facto control. In Aug., Wireless Bureau formally reinstated NextWave’s licenses following D.C. Circuit Court ruling. In FCC filing Jan. 28, NextWave contended that govt.’s decision to seek Supreme Court review provided no grounds for reconsideration of agency’s license reinstatement decision.