Seeking to end a costly dispute over wireless licenses, Verizon Wireless and four other winning bidders in a January airwave auction urged the government Wednesday to pay as much as $5 billion to a disgruntled bidder so that the remaining firms can keep their airwaves.
The five companies, whose bids raised $17 billion for the government, made the proposal in a letter to the Federal Communications Commission, the Justice Department and the Office of Management and Budget.
The letter came a month after a federal appeals court revoked the FCC's January sale of wireless phone airwaves to Verizon and 20 other carriers and ordered them returned to bankrupt NextWave Telecom Inc.
The FCC had repossessed the airwaves when NextWave, which successfully bid $4.7 billion for them in 1996, could not make its payments. The appeals court said the FCC could not repossess the airwaves until NextWave completed bankruptcy proceedings.
An FCC spokesman said the agency was reviewing the proposal from the five wireless bidders. The spokesman said the FCC had not decided whether to appeal the federal court decision, which threatens to slow the roll-out of the next generation of mobile phones.
Verizon, Alaska Native Wireless, Dobson Communications, VoiceStream Wireless and Salmon PCS urged the agency to end the dispute by paying NextWave $4 billion to $5 billion. The government would keep the remaining auction proceeds, about $12 billion.
"We are at a fork in the road," the companies said in their letter. "The government can continue to litigate this case, possibly for several years more. Or, you can negotiate a resolution now."
That may not be easy.
Hawthorne, N.Y.-based NextWave has maintained that it wants its wireless licenses--not money. The company says it is ready, willing and able to build out a costly new wireless phone network, even though most major markets already have five or more competitors.
NextWave reiterated that position in a statement issued Wednesday by its deputy general counsel, Michael Wack.
Wack accused Verizon and the four other companies of making "a baseless and unfounded effort to stop a competitor from entering the marketplace. . . . Competition should be carried out in the marketplace, not in the courts or through inappropriate use of the regulatory process."
In addition, experts said the FCC would face legal obstacles in trying to make a cash settlement because the agency lacked the authority to disburse amounts of money that large. They said Congress would have to pass legislation to authorize the agency to make a sizable settlement offer.
The Bush administration would probably oppose such a move because a huge settlement would cut into the budget surplus that the administration is counting on.
"My impression is that the FCC would be interested in settling . . . but the question is, 'What is the FCC going to settle with?' " said Scott Blake Harris, a Washington communications lawyer who formerly headed the FCC's international bureau. "The FCC doesn't have the authority, on its own, to disburse that money to anybody but the U.S. Treasury."
What's more, there are at least two other disgruntled and bankrupt airwave bidders standing in line behind NextWave, also seeking wireless licenses.
"We petitioned the FCC a couple of weeks ago for our licenses," said Charles Simpson, a New York lawyer who represents Urban Communications PCS, a small, minority-owned firm that bid $100 million for wireless licenses in the 1996 auction but, like NextWave, was unable to make payments and filed for bankruptcy.
"What got us here is that no one was willing to endeavor to resolve this through negotiations; everyone was pulling their guns out looking for a fight," Simpson said.
They got their fight in court, Simpson continued. "Years have gone by and nobody has benefited from this license dispute but the lawyers, of which I am one."