Verizon Wireless asked FCC to ‘promptly’ refund its entire deposi...

1 turned down Verizon petition asking that court compel “full compliance” with its June 2001 ruling, meaning that auction was void and all down payments should be returned (CD March 5 p2). Letter was written on same day as U.S. Supreme Court agreed to hear oral argument in FCC’s appeal of D.C. Circuit’s NextWave ruling. Re- auction winners asked FCC earlier this year to return $3.1 billion in down payments that agency has held without interest since Feb. 2001. Verizon Wireless, as largest re- auction winner, has largest deposit at stake, $1.7 billion. Citing D.C. Circuit’s denying Verizon’s petition that it enforce June 2001 ruling, company said in letter to FCC Deputy Gen. Counsel John Rogovin March 5: “We want to make clear that, to the extent the contract is not already void or voided, and to the extent we have the right to void the auction contract as to the NextWave licenses, we elect to void the contract.” Verizon Wireless said it didn’t want Commission to retain 3% or any portion of original bid prices. One expectation earlier this year had been that Commission might hang on to small portion of deposits after completing refunds to make it easier to revive settlement that expired Dec. 31. That proposed agreement by govt., re- auction winners and NextWave lapsed after Congress failed to approve pact. “The fact that we worked with the Commission in making a failed attempt at a legislated settlement plainly does not bar us from asserting the Commission’s breach of the auction contract,” Verizon Wireless Gen. Counsel Mark Tuller told Rogovin. Carrier hasn’t been able to “derive any value” from PCS licenses that were returned to NextWave, he said. Carrier said it had “had to incur costs in making alternative arrangements to satisfy capacity demands.” Saying it had been 13 months since auction and deposits hadn’t been returned, Verizon said that was “well beyond any reasonable time frame in which the government had the obligation to deliver the licenses to the winning bidder.” Meanwhile, status hearing in case was held last week in U.S. Bankruptcy Court, White Plains, N.Y. Judge Adlai Hardin reportedly set next status hearing for Oct. 22. He told participants at brief hearing that he expected that Supreme Court processes would take significant time and he suggested that participants in last round of settlement talks might want to talk again about fate of licenses. Legg Mason issued note to investors Fri. saying “one key question” in light of Supreme Court decision to take case was whether FCC would hold re- auction winners to their bid commitments “if the FCC definitively wins back the licenses, no matter how long it takes.” Legg Mason said: “This is critical because if the FCC does not release the winners from those obligations, the market will assume that almost $16 billion is tied up and cannot be used on other capital expenditures.” Report said that unless something short-circuited litigation, FCC was expected eventually to release re-auction winners from their obligations. “Keeping the winners on the hook to buy spectrum that could be tied up for several years may not be seen as serving the public interest, even if bidders were warned they assumed all litigation risks,” Legg Mason report said.