Cingular and NextWave filed applications with the FCC to assign l...

parts of its “unjust enrichment rules,” which require designated entities (DEs) to pay penalties if they sell a license to a non-DE during a restricted period to compensate for advantages such as bidding credits or installment payment plans. The U.S. Bankruptcy Court last week approved Cingular’s acquisition of 10 MHz of PCS spectrum in 32 markets and 20 MHz licenses in Tampa and El Paso. The companies filed 14 applications Fri. “Due to a complex set of circumstances, spectrum licensed to NextWave has not been used to deliver widespread commercial wireless communications to the public,” the applications said. “The proposed transaction will enable a portion of that spectrum to be put into immediate commercial use to benefit wireless consumers.” The companies said the transaction raised “no competitive concerns” for the FCC. It would cover the assignment by NextWave of all its interests in 10 or 20 MHz of spectrum to be disaggregated from 20 C-block PCS licenses and fourteen 10 MHz F-block licenses. The filings said the Justice Dept. had approved a term sheet allowed by the bankruptcy court, under which Cingular would pay the FCC $714 million for the licenses involved. Repayment terms for the rest of NextWave’s spectrum still must be worked out with the govt. The companies told the FCC the proposed deal would advance the public interest by: (1) Allowing spectrum that had been tied up in litigation for more than 5 years to be put into general commercial use. (2) Expanding the national footprint of Cingular by adding markets in which the carrier currently had no spectrum. (3) Allowing Cingular to expand network capacity in markets where it offered service. The companies’ applications cited unjust enrichment rules that applied to disaggregation of PCS spectrum. The unpaid principal associated with the licenses in this deal is about $687 million, they said. The term sheet spells out that in agreeing to accept the direct payment of $714 million, NextWave and the FCC relinquish all claims on the licenses. The filings said the govt. was agreeing to an amount that might differ from the sum it would otherwise receive under unjust enrichment rules “in less unique circumstances.” The payment to the FCC represents an amount greater than the aggregate unpaid balance of the original amounts NextWave bid for the spectrum, the filings said. The term sheet payment also “avoids the uncertainties” in having the claims related to those portions of the licenses resolved through bankruptcy proceedings, the companies said. As a result, partial waivers of unjust enrichment payment rules are justified, they said. They said “rigid application” of the unjust enrichment rules would prevent “rapid deployment” of services to the public over the spectrum covered by the designated licenses. Bidding credits weren’t an issue for most of the C-block licenses covered under this deal because the FCC hadn’t used bidding credits in the original C-block auctions, which were restricted to DE bidders.