FCC Wants Out of Collection Business for Wireless Licenses

Moving to overhaul one of Washington’s hottest methods of raising revenue for the cash-strapped U.S. Treasury, the Federal Communications Commission is seeking to transfer responsibility for collecting $10 billion worth of wireless licenses sold to communications companies last year.

The FCC, stung by a handful of companies whose entrepreneurial zeal has exceeded their pocketbooks, said this week that it has suspended collection of installment payments on the licenses and is seeking to have the Treasury Department take over as bill collector for future payments. That transfer would eliminate a conflict in the FCC promoting wireless services by holding auctions and then serving as bill collector once licenses are sold.

Last month, for example, FCC Chairman Reed Hundt told the House Appropriations Committee that “it is . . . time to assess whether it is consistent with our statutory mandate under the 1993 Budget Act to act as both the promoter of wireless competition and as banker to the wireless industry.”

The perils of that dual role were driven home this week when the the second-highest bidder in a recent FCC auction filed for bankruptcy protection in Maryland, after a major foreign investor called in its loan to the company.

The company, Pocket Communications Inc. of Washington, sought court protection from its creditors after bidding $1.4 billion for 43 licenses to provide a cellular-phone-like wireless service called personal communications services.

However, FCC officials say there is no broad-based concern that the government won’t collect all or most of the money that has been bid in the license sales, which began in 1994. Most of the defaults on wireless licenses have been confined to the auctions for interactive-TV licenses and for so-called C-block auctions.

Many interactive-TV auction participants didn’t understand the technology and were hampered by vendors who could not quickly produce equipment to deploy the technology.