In reply brief at U.S. Supreme Court filed late Mon., FCC disagre...

into barrier to regulatory goals. High court is set to hear oral argument Oct. 8 on FCC’s appeal of U.S. Appeals Court, D.C., ruling that overturned results of Jan. 2001 re-auction of NextWave’s PCS licenses and returned spectrum to bankrupt carrier. Commission took exception to contention raised by Urban Comm, another bankrupt C-block bidder, that it altered its position as market conditions changed. FCC stressed Sec. 525 of U.S. Bankruptcy Code doesn’t bar agencies from ever cancelling licenses of debtor. Rather, Sec. 525 prohibits govt. agencies from revoking licenses of debtor or bankrupt entity solely because they haven’t paid dischargeable debt, Commission argued. FCC told court that all that Sec. 525 bars agencies from doing is revoking licenses only because debtor has not paid debt that is dischargeable under Bankruptcy Code. Instead, FCC said it cancelled NextWave’s licenses for regulatory reasons, specifically its assessment of public interest. “Nor were the licenses cancelled because respondents failed to pay a debt ’that is dischargeable’ in bankruptcy,'” FCC said. “The full and timely payment condition is a critical regulatory term of FCC licenses. It is not a debt, let alone dischargeable in bankruptcy.” Commission had cancelled NextWave licenses after carrier failed to make installment payment. NextWave had told Supreme Court in June that Commission’s revocation of its PCS licenses for missed payment was “obvious” Bankruptcy Code violation, because Code doesn’t contain regulatory exception for FCC. But Commission countered Mon. that NextWave doesn’t explain “how the auction system can be reconciled with a regime in which a winning bidder can have its bid altered in bankruptcy, or hoard FCC licenses indefinitely in the hope that the market will eventually support its bid.” Agency stressed Sec. 309(j) of Communications Act requires prompt utilization of spectrum without administrative or judicial delays and that Bankruptcy Code “generally avoids intrusion on agency regulatory activities.” FCC argued that it cancelled NextWave’s licenses partly because it failed to make payment, but that this wasn’t only reason. “It also occurred because the FCC, after considering respondents’ circumstances, concluded that further relaxation of the regulatory conditions of full and timely payment would injure the public interest,” FCC said. Alaska Native Wireless filed friend-of-court brief that echoed public interest spectrum issues raised by Commission. “NextWave focuses only on its own interest in reaping a perceived windfall in order to solve its financial woes, all the while seeking to blame the FCC for those problems and its inability to yet provide service to a single customer with the spectrum,” said Arctic Slope, which, along with AT&T Wireless, is among backers of Alaska Native Wireless (ANW). ANW was 2nd largest bidder in NextWave re-auction behind Verizon Wireless. It argued that NextWave shouldn’t have had expectation that it would be able to keep licenses without meeting all regulatory obligations.