FCC Refuses to Halt Frequencies Auction

Federal regulators denied a challenge Wednesday to a fall auction of valuable chunks of the airwaves that companies are eyeing for wireless phone and Internet services.

The Federal Communications Commission said it plans to go forward with an auction of frequencies that were awarded several years ago to NextWave Telecom, a company that later filed for bankruptcy.

The FCC said the licenses held by NextWave were automatically canceled because the company had failed to meet its payment deadlines.

The commission announced Wednesday it would again auction the licenses--expected to fetch bids worth billions of dollars--on Dec. 12, pushing the auction back slightly from a previously scheduled date.

NextWave had petitioned the agency to reconsider its decision to cancel the licenses and auction them. NextWave had offered to pay its debt in full and said the commission had acted unlawfully by revoking licenses while the business was trying to reorganize.

“Commission review presented a good opportunity to end the litigation and allow NextWave to put its spectrum licenses to use immediately to benefit consumers and competition,” said Michael Wack, NextWave’s deputy general counsel. “The interests of consumers, taxpayers and NextWave’s creditors and investors could have been harmonized in a win-win resolution.”

Wack said the company plans to appeal the FCC’s decision to the U.S. Circuit Court of Appeals for the District of Columbia and probably will seek a stay of the auction.

The commission has held firm on the policy that it must protect the integrity of the auction process by requiring bidders to meet their payment deadlines. FCC officials say that allowing bankrupt companies to hold on to the licenses--and eventually pay only a portion of what they had bid--will undermine the entire process and stall the roll-out of future wireless services.

“Enabling American consumers to access the Internet with handheld wireless devices is one of the most exciting advances in telecommunications,” FCC Chairman William Kennard said Wednesday. “We can ill afford to delay bringing new communications services to the public.”

Analysts say the licenses are worth billions more now than the $4 billion NextWave originally bid for them because of the increasing demand for wireless voice and data services.

The auction will allow the nation’s largest wireless companies to vie for some of the frequencies, which were originally reserved for small businesses.

That means businesses like Verizon Wireless, SBC Communications and others can bid on certain licenses under the modified auction rules.