Cingular told the FCC Wireless Bureau last week that the Justice ...

applications at the FCC in Oct. to assign licenses as part of a $1.4-billion deal in which Cingular was buying PCS spectrum from NextWave in 34 markets. The companies asked that the FCC waive parts of its unjust enrichment rules, which require that designated entities (DEs) pay penalties if selling a license to a non-DE during a restricted period to compensate for advantages such as bidding credits. The filings said DoJ had approved a term sheet allowed by the bankruptcy court under which Cingular would pay the FCC $714 million for the licenses involved. (The companies said the unpaid principal associated with the licenses in the deal was about $687 million). The companies cited unjust enrichment rules that applied to disaggregation of PCS spectrum. Cingular said the term sheet represented a “negotiated arms'-length settlement of litigation.” It said DoJ, on behalf of the FCC, had agreed to accept $714 million to satisfy all govt. claims on the designated licenses, which represent a fraction of NextWave’s spectrum holdings and still would leave it with a national footprint. In response to a Wireless Bureau request for more information, Cingular said DoJ’s approval of the debt compromise was important to the FCC’s consideration of the pending waiver request because: (1) The debt that was the focus of both the DoJ approval and the pending waiver request “results from the same source: the FCC’s auction rules.” (2) DoJ approval was predicated on the Commission’s recommendation on the debt compromise, which examined public interest factors. (3) The FCC’s recommendation that DoJ approve the debt compromise took into consideration the amount owed under the unjust enrichment rules. (4) “DoJ made an independent review of the relevant public interest factors and determined that a compromise of NextWave’s debt would serve the interests of the United States.” Cingular said the term sheet on the licenses was finalized after it and NextWave had reached agreement on the lump-sum purchase price for the spectrum package. It said the $714 million direct payment to the FCC “is more than sufficient” to pay in full the unpaid principal amount attributable to each of the designated licenses. “The total amount of unpaid principal is approximately $687.5 million, leaving approximately $26.5 million remaining from the FCC direct payment to be applied to unpaid accrued interest,” Cingular said.