Wireless Spectrum Auctions

NTIA plans to send legislative proposal to Congress today (Thurs.) that would postpone for 2 years deadline for receipt of advanced wireless auction proceeds. Move is designed to give federal policymakers more time to reach decision on obtaining additional spectrum for 3rd generation wireless services. In her first news conference, NTIA Dir. Nancy Victory said auction proposal didn’t mean current 3G viability analysis by broad range of federal agencies would itself take 2 more years: “We are hoping to do it in a much shorter period.” Legislation that would provide additional time for auction proceeds to be deposited in U.S. Treasury “is a recognition of the fact that more time is needed in order to take a look at this issue,” she said, referring to 3G. New date would be Sept. 30, 2004, for proceeds to be deposited from auction of 1710-1755 MHz and 2110-2150 MHz, instead of current statutory deadline of Sept. 30, 2002, she said. Besides 3G, Victory said she saw NTIA focusing on questions of broadband deployment, telecom and broadcast minority ownership, comprehensive spectrum policy review.

FCC asked U.S. Bankruptcy Court, White Plains, N.Y., Fri. to reject NextWave’s “speculative and skeletal disclosure statement” that is part of its pending plan of reorganization. Wide-ranging objection by Commission assailed lack of information about NextWave’s financing, business plan, expected cash flow, use of funds, market analysis and liquidation plan. “It is impossible for this court or any creditor to make an informed judgment about the proposed current plan,” FCC said, contending it was “unconfirmable on its face.” Objection underscored that NextWave’s compliance with eligibility requirements for regaining its PCS licenses still had to be decided in pending regulatory proceedings. “It is both premature and misleading for NextWave to affirmatively represent to creditors that it believes itself to be in compliance with the various eligibility requirements for the licenses,” FCC said: “Any such representation must be tempered by language apprising creditors that the threshold question of its eligibility to hold the licenses is a matter to be decided by the FCC alone, and that this court lacks jurisdiction to issue any orders with respect to the question of NextWave’s compliance.” Meanwhile, group of investors that included CIBC, Liberty, Pacific Capital Group and TPG Partners also filed objection to disclosure statement Fri.

Alaska Native Wireless (ANW) and VoiceStream filed petition at FCC late Thurs. asking agency to deny reinstatement of NextWave’s PCS licenses and contending recent $2.5 billion investment agreement by UBS Warburg gave banker “de facto control.” Petition also challenged proposed $300 million investment by Qualcomm, saying stake would call into question NextWave’s independence and adherence to FCC licensing requirements. Qualcomm investment “could substantially impair NextWave’s ability to implement its own business and policy decisions regarding build-out, deployment and spectrum usage, particularly if NextWave is unwilling to lose Qualcomm as a source of needed mobile virtual network operators customer contracts,” petition said. Petition was filed on same day that U.S. Appeals Court, D.C., was scheduled to hand down remand mandate of decision that overturned FCC decision to cancel NextWave licenses for nonpayment. FCC wasn’t planning to appeal to U.S. Supreme Court decision by D.C. Circuit Aug. 23 that rejected Commission’s request for stay of mandate, source said (CD Aug 27 p2).

Defense Secy. Donald Rumsfeld and Joint Chiefs of Staff Chmn. Henry Shelton told Senate Majority Leader Daschle (D-S.D.) that no final decision should be made to reallocate DoD spectrum for 3G “until truly comparable spectrum is identified and made available.” Letter, sent to Daschle Mon. and released Wed., marks first time Rumsfeld and Shelton have spelled out publicly their position on upcoming 3G spectrum decisions. Citing “win-win” solutions put forward by wireless industry, they said they remained “open to such a solution provided that DoD requirements are preserved.” But Rumsfeld and Shelton cautioned that no solution was feasible until comparable spectrum has been identified for DoD functions that would be displaced. “Therefore, we ask that no decision be made to reallocate the federal band, including a ‘policy decision’ or ‘decision in principle,’ until truly comparable spectrum is identified and made available,” they wrote. Letter comes within days of expected FCC decision that will take other major candidate band for 3G -- 2500-2690 MHz licensed for MMDS and Instructional TV Fixed Service -- out of running for relocation for advanced wireless services (CD Aug 28 p1).

FCC is poised to include language in order due out shortly that would take MMDS and Instructional TV Fixed Service (ITFS) out of play for 3G relocation but would allow both fixed and mobile operations to operate in MMDS band. Item has been on circulation on 8th floor, with decision expected this week or early next week, sources said. FCC Chmn. Powell pledged at last agenda meeting (CD Aug 10 p3) to have Commission action by month’s end on status of MMDS and ITFS, with industry observers expecting then that operations at 2.5 GHz would be taken out of play for additional 3G spectrum. Additional flexible reallocation provisions in pending order have created concerns in mobile wireless community that that could hamper overall 3G decision-making on obtaining additional spectrum. Issue, numerous industry sources said, is that it’s not technically feasible to share 2.5 GHz between prospective mobile uses and existing fixed wireless applications, so granting spectrum flexibility would provide no additional capacity for 3G use.

FCC asked U.S. Bankruptcy Court, White Plains, N.Y., not to approve Oct. 30 confirmation hearing proposed for NextWave’s reorganization plan until after U.S. Supreme Court rules on Commission’s request for certiorari. Commission plans to ask court Sept. 12 to review U.S. Appeals Court, D.C., ruling that returned PCS licenses to bankrupt C-block bidder. D.C. Circuit had remanded decision to cancel NextWave licenses for missed payment. U.S. Attorney N.Y. Mary Jo White told Bankruptcy Court Wed. that FCC wanted Supreme Court to have opportunity to weigh certiorari petition before proposed confirmation hearing was held for NextWave reorganization plan. Meanwhile, despite uncertainty created by litigation, Office of Management & Budget (OMB) said it wasn’t fretting over possibility it might not receive auction proceeds in NextWave case. In Jan. PCS re-auction, wireless carriers bid nearly $15.4 billion on licenses for which NextWave originally had bid $4.7 billion. D.C. Circuit turned down stay request, at our deadline.

As expected, Northpoint went on record at FCC with opposition to any auction in 12.2-12.7 GHz satellite band it seeks to use for satellite service. Since company introduced concept, others including Pegasus and MDS America have made applications mirroring Northpoint’s to use spectrum originally set aside for satellite operators. In meeting with FCC Wireless Bureau and legal adviser to Comr. Abernathy on pending license and auction, Northpoint said auction would delay service, penalize company and stymie future innovation. FCC auction would delay service rollout for “perhaps years and inevitably increase cost to consumers,” it said: “Moreover, auctions have never facilitated the deployment of service for rural areas.”

BellSouth and NAB are among those urging FCC to deny requests of satellite radio companies XM Radio and Sirius Satellite Radio for special temporary authority (STA) to operate high-powered terrestrial repeaters. NAB Pres. Edward Fritts said that “the time for subterfuge by XM Radio and Sirius Radio is over… These companies must come clean with regulators and the American people on their true intentions for making satellite radio a viable business.” In filing at FCC, NAB said intent of satellite digital audio radio service (SDARS) applications was “undisputed -- terrestrial repeaters should be used only to reach areas where a satellite signal cannot reach.” Citing concerns of interference to Wireless Communications Service (WCS) operations, BellSouth (BS) told FCC that XM and Sirius hadn’t met burden of proof to demonstrate that there were “extraordinary circumstances” warranting grants of STAs and that grants would serve public interest.

Although it’s unknown who will lead House Armed Services Procurement Subcommittee following last week’s death of Chmn. Spence (R-S.C.), one likely successor intends to fight any attempt to transfer military spectrum to private sector. Rep. Hansen (R- Utah), senior majority member of procurement panel, will do battle with proponents of mandatory relocation of 1775-1850 MHz block of spectrum, staffer said: “Absent some new and compelling information, he would be opposed to having the military relinquish” that spectrum block.

Alaska Native Wireless (ANW), Verizon Wireless and VoiceStream reiterated calls to FCC to investigate qualifications of NextWave to hold C-block licenses. Aug. 15 filing at FCC by carriers, which won NextWave licenses in Jan. C-block re-auction, was response to NextWave request that Commission dismiss challenge to its qualifications to reclaim PCS spectrum (CD July 31 p1). NextWave asked FCC last month to reject petition by carriers that cited concerns over foreign ownership issues, designated entity status and financial qualifications to meet licensee requirements. Original petition by 3 companies contended U.S. Appeals Court, D.C., decision that remanded FCC’s NextWave license cancellation decision addressed only issues related to bankruptcy code. Carriers said that meant Commission still could decide on other grounds not to reinstate licenses of NextWave, which disagreed. “The NextWave decision is not self-executing and issuance of the [remand] mandate will not automatically reinstate the licenses at issue without further action by the Commission,” 3 carriers said in response to NextWave filing. “As a matter of sound public policy and administrative efficiency, the Commission should undertake such investigation prior to any action to reinstate the licenses.” Carriers disputed NextWave argument that D.C. Circuit’s remand precluded FCC’s undertaking investigation they sought. Carriers said they wanted FCC to probe “what appears to be a lack of material information regarding whether respondent [NextWave] is in compliance with the Commission’s designated entity and foreign ownership rules.” Three carriers cited 2nd plan of reorganization that NextWave has filed with U.S. Bankruptcy Court, White Plains, N.Y., saying it provided “little to no information regarding who will own and control the company, if and when respondent emerges from bankruptcy. It is this dearth of information that drives the fundamental need for the requested investigation.” They cited lack of details on whether NextWave would comply with designated entity and foreign ownership rules. - - MG