House probes FCC-NextWave settlement

The FCC, NextWave Telecom and a group of wireless companies have handed Congress a hot potato. Lawmakers have until Dec. 31 to figure out what to do with it.

Congress has been asked by the FCC and the other parties to enact legislation that would confirm the terms of an agreement they reached in a recent spectrum dispute. At a hearing held by a House of Representatives' subcommittee Tuesday, congressmen appeared apprehensive to pass such legislation, but largely agreed that approving the controversial settlement may be the only viable option in front of them.

The settlement, forged last month, calls for a group of wireless carriers - including Verizon Wireless, AT&T Wireless Services and Cingular Wireless - to pay the FCC $15.8 billion for spectrum licenses that they bid on during an auction last January. In June, a circuit court in Washington, D.C., nullified that auction because some of the licenses had been acquired by NextWave in 1996, at a $4.8 billion price tag, and then were revoked by the FCC when the company failed to make payments. Under the November settlement, the FCC would pay $5.8 billion to NextWave out of the sum it receives from the other wireless carriers.

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At Tuesday's hearing, held by the Energy and Commerce Committee's Subcommittee on Telecommunications and the Internet, lawmakers expressed frustration with being called upon to judge the complex settlement in a very short amount of time.

"Congress has been asked to help clean up a judicial train wreck," said Fred Upton, a Republican from Michigan and the subcommittee's chairman. He pointed out that while the dispute between the FCC and NextWave over ownership of the spectrum licenses was held up in court - both in bankruptcy proceedings, as NextWave claimed it still owned the licenses even though it defaulted on payments, and with an appeals court - valuable spectrum went unused for five years.

Congress' alternative to approving the settlement would be to wait for the Supreme Court to hear the case. Yet the deal makers warned that while all parties agree to the terms today, they can pull out after the agreed Dec. 31 deadline.

This settlement needs congressional action because it involves the government paying out a large amount of cash, and "the FCC has no checkbook from which it could pay NextWave to relinquish its licenses," said Michael Powell, the commission's chairman, during the hearing. Also, the agreement contains a judicial review provision, based on other acts of Congress, that would significantly limit the ability of other parties to challenge the settlement, Powell said.

That provision would remove any question regarding who owns the disputed spectrum, said one executive of a wireless company.

"The fragile nature of the agreement is very difficult for all parties," said Dennis Strigl, CEO of Verizon Wireless, who also spoke at the hearing. "Legislation (would bring) certainty; it would put clear spectrum into use."

Also at the hearing, a representative from Urban Communicators PCS addressed the committee with his company's concerns that it is in a similar situation to NextWave, yet the FCC has refused to negotiate a settlement in this spectrum license dispute until a resolution to the NextWave case is found. But because of the requested legislation that would seal the NextWave settlement, it is unlikely that the FCC could negotiate with any other parties in similar circumstances.

"Congress should order the FCC to come to a similar agreement with Urban Comm," said James Winston, the company's secretary and general counsel. John Shimkus, a Republican from Illinois, told Winston that the committee would probably consider this request.

Faced with a short time frame condensed even further by Congress' holiday break later in the month, one influential congressman said that while the settlement may not be the perfect answer to this long-running spectrum squabble, it is a solution.

"Wireless carriers are counting on that spectrum to roll out or enhance valuable consumer services. And we have a giant hole in the budget that needs to be plugged," said W. J. "Billy" Tauzin, a Republican from Louisiana and chairman of the House Committee on Energy and Commerce. "This (settlement) puts to rest issues that should have been put to rest a long time ago."

Meanwhile, the proposed settlement is facing opposition in the Senate, as a pair of law makers have publicly opposed the deal.

The IDG News Service is a Network World affiliate.