WASHINGTON, Dec. 11 (UPI) -- The House Energy and Commerce Committee chambers resounded with accident metaphors Tuesday as members took turns damming and praising a proposed settlement to free up billions of dollars' worth of wireless telecommunications licenses held by bankrupt NextWave Telecom.
The NextWave saga began in the mid-1990s, when the company bid $4.8 billion, and made a $500 million down payment, for 90 licenses to provide wireless Personal Communications Services. NextWave failed to make payments on the licenses and went bankrupt in 1998.
At that point, the Federal Communications Commission reclaimed the licenses and re-auctioned them for almost $16 billion, only to have the D.C. Circuit Court rule in June that bankruptcy law nullified the FCC's actions.
The parties in the ongoing legal battle have agreed to a settlement that gives the licenses to the winners of the second auction, gives $10 billion to the U.S. Treasury, and gives NextWave $5.8 billion in compensation. The deal requires an act of Congress to create the authority to distributing funds accordingly. It also strongly urges legislators to act before Dec. 31, leading several members of the House committee to chastise the FCC for acting rashly.
"We're here in part today because Congress has been asked to clean up a judicial train wreck between bankruptcy policy and spectrum policy," said Rep. Fred Upton, R-Mich., chairman of the Telecommunications and the Internet Subcommittee. Several other committee members used the "train wreck" analogy, although there were also references to "multi-car pileups on the telecommunications superhighway."
Michael Powell, the FCC chairman, told the committee any alternatives to the settlement entailed large risks for the government. He also said references to Dec. 31 aren't meant to "jam the Congress into agreement," but simply state the realities of trying to hold a fragile deal together.
The deal works in the public interest by freeing up the wireless spectrum that sat unused during the whole process, Powell said, but more needs to be done.
"Settling with NextWave still leaves a gaping loophole for anyone seeking to participate in an auction and then avoid the resulting government debt," Powell told the committee. "It is important for Congress to make clear how spectrum auctions are to be treated under the U.S. Bankruptcy Code so that these cases never happen again."
Upton, Rep. Edward Markey, D-Mass., and Rep. Billy Tauzin, R-La., chairman of the full committee, were among those voicing similar sentiments on revamping bankruptcy law, with Upton saying he will introduce legislation to do just that. The members diverged, however, in their opinions on the merits of the settlement.
Markey took exception to the idea that the Treasury would get $10 billion, pointing to budget figures that suggest the deal would actually create a shortfall of $4.5 billion. He also questioned whether NextWave should benefit from the arrangement.
Tauzin and Upton, on the other hand, agreed with Powell that the deal is the best option available. Tauzin said the legislative piece of the settlement should be passed as quickly as possible.
Rep. John Dingell, D-Mich., the full committee's ranking member, urged caution in reviewing the settlement. Despite the FCC's diligent efforts to investigate the matter, the agency might still lack critical pieces of information necessary for making the right decision. For instance, Dingell said changes in NextWave's ownership structure might have created too much foreign ownership for the company to qualify as a license-holder.
"The parties are also asking us to abandon ... the basic principle that expressly forbids the FCC from considering potential revenues generated from competitive bidding in making spectrum policy decisions," Dingell said. "There are many questions to be asked and answered before we legislate."
Joseph Hunt, counsel to the Deputy Attorney General in the U.S. Department of Justice, told the committee the deal is in the public's best interest. Especially important are provisions that would prevent excessive further legal battles after the settlement, he said.
"All parties, including the United States, need to bring an end to the wrangling over these licenses and put the spectrum to good use," Hunt said in prepared testimony.
