Supreme Court clears way for wireless auctions

The Supreme Court makes it easier for the FCC to auction off wireless communications licenses by rejecting a plea from bankrupt wireless provider NextWave Telecom.

2 min read
WASHINGTON--The Supreme Court made it easier for the Federal Communications Commission to auction off wireless communications licenses by rejecting a plea from bankrupt wireless provider NextWave Telecom.

NextWave had the $4.7 billion winning bid in 1996 for those licenses, which cover 165 million people in the United States. The company paid only $474 million before entering bankruptcy, however, and the FCC reclaimed them.

As demand for wireless services continues to grow, and wireless providers seek to develop next-generation phones complete with video and high-speed Internet service, the need for scarce airwaves licensed by the FCC has become acute. Large and small operators will be bidding on the forfeited NextWave licenses and others in upcoming auctions.

"This is another chapter closed," FCC Chairman William Kennard said in a statement. Kennard has seen his agency wrestle with NextWave over these licenses through the courts and on Capitol Hill. "This is an important step in proceeding toward the December 12 auction."

That auction, which repeatedly has been postponed, is expected to return billions of dollars to the U.S. Treasury, with NextWave's licenses currently valued in the neighborhood of $10 billion, more than twice its bid four years ago.

A New York bankruptcy court had ruled that NextWave could keep its licenses, but that ruling was overturned by the 2nd U.S. Circuit Court of Appeals in New York in May. The appeals court essentially ruled that bankruptcy courts don't have the authority to challenge the procedures of a federal agency, in this case the FCC.

NextWave appealed that decision to the Supreme Court last month.

NextWave also filed an appeal late last month for a hearing before the full 2nd Circuit Court to reverse that decision and asked the U.S. Court of Appeals, D.C., to stay the FCC's auction until all court appeals by the company were exhausted.

The company also had appealed to the FCC to reinstate its licenses, an action that was rejected by the commission last month.

NextWave has been lobbying for months to have language attached to various spending bills in Congress to help win its licenses back, but so far that effort has been as unsuccessful as its court pleadings. Congress is expected to adjourn for the year later this week.