No Clear Winner as Sprint, FCC Battle over 800 MHz Order
If Sprint Nextel must clear channels 1 to 120 before it gets compensatory spectrum from public safety, it could wreck the carrier’s 800 MHz network, Chris Wright, representing the carrier, told the U.S. Court of Appeals for the District of Columbia Circuit Tuesday. The three-judge panel hearing the case peppered FCC and Sprint lawyers with mostly procedural questions, giving little indication how it might rule. Judges David Sentelle, Douglas Ginsburg and Janice Rogers Brown heard arguments.
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Sprint is challenging a September FCC order that it clear channels 1-120 by June 26 whether or not all NPSPAC licensees in a given region are ready to relocate in the same time frame (CD Sept 11 Special Bulletin p2). That would force it to give up spectrum before getting spectrum in compensation, violating the landmark 2004 FCC 800 MHz rebanding order, Sprint said.
Rebanding delays aren’t Sprint’s fault, Wright told the court. “The 36-month [rebanding] deadline applied to everyone,” he said. “Nextel is prepared to comply with the deadline. Public safety is not.” The FCC told the court earlier that Sprint needed a push to quit the spectrum. “Sprint has an obvious incentive to remain on its spectrum, and that incentive has helped create delays in the rebanding process,” the agency said.
“The oral arguments revealed that this is an extremely intractable issue,” said Medley Global Advisors analyst Jessica Zufolo. “It’s complicated from a legal, operational and technical standpoint, all of which underscores the point that Sprint’s cost estimates are likely to be exceeded depending on how many waivers they apply for.”
The judges’ ruling is hard to predict, Zufolo wrote in a research note. “The justices seemed aware of the upcoming rebanding timeline and the request for an expedited ruling,” she said. “They also showed interest in Sprint’s substantive claim that the FCC may be unreasonable in compelling it to vacate portions of the 800 MHz band by June 26.”
The FCC never adequately answered Sprint objections to the deadline or demands for a swap before it left channels 1- 120, Wright said. “There was a big hurry because the commission wanted to hold its meeting on Sept. 11 for symbolic reasons,” he said. “It was a very truncated proceeding.” Wright told the judges that three million first responders who use the legacy iDEN network would be among those whose calls will be dropped, a concern the FCC never addressed.
“They did respond,” replied Sentelle. “They may not have adequately. They did respond.”
A recurring question was whether Sprint showed that the FCC didn’t live up to a “contract” created by the 2004 order, or was claiming instead that the FCC order was “arbitrary and capricious” and a violation of the Administrative Procedure Act.
Sentelle said Sprint’s arguments appeared confused. “Is this a contract action, or is it an APA action?” he asked. “Your brief is a little deceptive on that point.”
Joel Marcus, arguing for the FCC, said Sprint’s argument was “contract, contract, contract.” The argument “can either be an APA claim or it can be a [contractual] claim,” he said. “It can’t be a contract claim that you recast as an APA claim.” Sprint still could seek waiver of the June deadline, emulating the many public safety entities that have asked for extensions, he said.
Wright said Sprint’s pleadings dedicated eight pages to contract complaints and nine to APA claims, arguments he termed interwoven. The carrier would be happy to win on either argument, he said. Wright also said a spectrum swap was key to the rebanding order, which Nextel executives insisted on before agreeing to the terms of the order. Nextel agreed to the deal prior to the Sprint merger.
Also in question was whether Sprint Nextel adequately raised the requirement that it must receive other spectrum in ex-parte meetings between Sprint and FCC commissioners. The FCC had argued in a pleading that Sprint “failed to raise its claims before the commission” and thus it should be barred from raising objections. Marcus told the court it wasn’t clear what was said during meetings Sprint referred to in an ex-parte letter. He said he had received “differing accounts.” But he questioned the legal status of the meetings.
Brown said the FCC seemed to mainly challenge whether Sprint had provided adequate warning of its concerns, and that should have been taken up in the Sept. 11 order. “I don’t see anything in your brief that says what [Sprint] says isn’t true,” Brown said. Sentelle said if the case law isn’t clear on the legal status of ex-parte letters like the one filed by Sprint. “If this [case] doesn’t” set a precedent, “it’s coming,” he said.