NEXTWAVE COURT BATTLE COULD TAKE UNTIL 2004 WITHOUT LEGISLATION
FCC Deputy Gen. Counsel John Rogovin told Practising Law Institute conference in Washington that agency was “seriously hopeful” that Congress would pass legislation implementing NextWave agreement by year-end. But in response to question by panel moderator Richard Wiley, he declined to place odds on Congress’s acting in time to meet condition of settlement agreement that legislation be approved by Dec. 31. He said that beyond that date, “there can be no guarantee we will hold that coalition together. It was pretty fragile.” Under scenario in which request for certiorari before U.S. Supreme Court would move forward next year, even with ultimate ruling favorable to FCC, certainty on disposition of licenses still might not be assured until 2004, he said, citing court scheduling issues.
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Of House bill introduced by Commerce Committee Chmn. Tauzin (R-La.) and others Thurs., Rogovin said: “We will watch that process closely and anxiously.” Of protracted settlement negotiations that had led to $16 billion proposal by wireless carriers, NextWave and govt., Rogovin said: “I think I have had the pleasure of having everybody walk out on me at some point during these negotiations. The first time it happened I was a little surprised.” As for congressional review, he said, “We have no intention of short-circuiting review by Congress.” Asked what would happen next if Congress failed to approve legislation, Rogovin said NextWave would face deadline to file brief at Supreme Court in mid- Jan. in response to FCC request for high court review this fall. Supreme Court has conference date scheduled shortly after that, which probably comes too close to filing deadline for that brief to be taken up in conference, Rogovin said. If Supreme Court decided to grant FCC request for review of U.S. Appeals Court, D.C., decision that overturned Commission decision to cancel NextWave licenses for nonpayment, Rogovin said he doubted oral argument would be held in current court term. That would mean court wouldn’t hear case until next term that starts in Oct. 2002, he said. Rogovin said even if court granted favorable decision, that could occur as late as June 2003 and still would leave several issues to be heard by D.C. Circuit on remand. “I could easily see a scenario where you are looking at 2004 before you had clarity,” Rogovin said.
In separate panel discussion, David Gross, coordinator of international communications & information policy at State Dept., said upcoming bilateral discussions on telecom and related issues include potential market-opening opportunities with Russia, China, Argentina and Brazil.
In panel discussion about future of telecom business, analyst Scott Cleland of Precursor Group said investment community still wasn’t very interested in telecom. Competitive telecom models proved too high risk, he said, with “high fixed cost, regulatory burdens and a number of other things that could go wrong.” At same time, sharing has lessened incentives for investment in incumbents, he said. Ex-FCC Chmn. William Kennard, now with Carlyle Group, said he disagreed that facilities sharing was key factor in investment downturn. “People are using the problems in the capital markets to say non-facilities-based entry doesn’t work,” Kennard said. “I disagree with that.” Nonetheless, when asked about homeland security issues, Cleland again raised value of facilities-based providers, saying risk of terrorism “does emphasize facilities-based infrastructure.” He noted that “Verizon brought the [N.Y.] Stock Exchange back into operation in 4 days” because it had facilities to do so. “In a war environment things are different than in peace and prosperity,” Cleland said.
Asked about future investment picture, Kennard said it was “very bright” because there would be huge demand for broadband and there still was “a lot of headroom” for growth in wireless business. “The biggest problem for entrepreneurs is the massive amount of consolidations and we're going to see another wave in a year or 2,” he said. However, Cleland warned that short-term future was “as bleak as I can remember.” He said venture capital had closed down and “the CLEC industry has all but vaporized.” Cleland said it would be long time before telecom industry recovered. “Telecom and technology has historically lagged in recovery by about a year,” which he said meant recovery probably wouldn’t come until 2003 or 2004. “The devastation [in competitive local entry] is extraordinary,” Cleland said. “The big monster flaw was the assumption that customer acquisition was easy and cheap,” he said. “It’s the most difficult thing.”
Dale Hatfield, ex-chief of FCC Office of Engineering & Technology, said not enough attention was given to equipment solutions for spectrum scarcity. There are too many “fragile systems” that can’t operate with any interference, he said. “Increasing the selectivity of receivers” could go long way in making spectrum use more efficient, Hatfield said.