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Prospects that Congress will authorize the $16 billion NextWave Telecom Inc. wireless license settlement by a Dec. 31 deadline dimmed considerably Dec. 6, with lawmakers in the House and Senate raising substantive and procedural objections to the deal. At a joint hearing of two House Judiciary subcommittees, Republicans and Democrats said there is little chance lawmakers could review the public policy implications of the settlement in the 10 to 14 days left before Congress adjourns for the year. “It will be difficult at best to have legislation originate and pass both Houses,” said Rep. Richard Boucher, D-Va. “We confront the very real prospect that this won’t happen.” In the Senate, Commerce Committee Chairman Ernest Hollings, D-S.C., and Arizona Republican John McCain held a joint news conference to denounce the settlement and to promise to do everything possible to block legislation implementing it. “The people putting this together have contempt for the legislative process,” McCain said. “The American people need to have a chance to know what is going to happen.” The senators said they do not expect to be able to hold oversight hearings by the deadline. Hollings also complained that the Federal Communications Commission and Department of Justice would not brief his committee. The congressional opposition came despite warnings from NextWave, the FCC and the Justice Department that the settlement would fall apart if lawmakers miss the Dec. 31 deadline. “There is no guarantee that after Jan. 1 there will still be a settlement agreement,” FCC deputy general counsel John A. Rogovin told the House Judiciary subcommittee. Jody Hunt, a counsel to the deputy attorney general at the Justice Department, said the bidders willing to pay $16 billion for NextWave’s licenses are expected to exercise their right to withdraw if the deal is not completed by Jan. 1. This is because the companies are unwilling to pay such a hefty sum for the spectrum unless they believe they can employ it in 2002. A delay of even a few weeks in approving the settlement could mean the spectrum would not be available until 2003, Hunt said. “If the implementing legislation is not enacted, we will return to litigation in which our prospects are uncertain and the path to success a long and costly one,” said Jay S. Bybee, assistant attorney general for legal counsel at the Justice Department. “Only if Congress enacts the implementing legislation and keeps this settlement agreement in place will the American people be able to realize in the foreseeable future both the improvements in wireless telecommunications services and the addition of $7 billion to the Treasury.” The dispute stems from FCC auctions in 1996 and 1997 for wireless spectrum. NextWave bid $4.9 billion for 63 licenses, putting $500 million down and promising to pay the balance over 10 years. The company, however, could not finance development of its network and was forced into bankruptcy in 1998. The FCC sought return of the licenses, arguing they were not part of the bankruptcy estate. After several years of litigation, the FCC in January re-auctioned the licenses for $15.9 billion. Several months later, the U.S. Court of Appeals for the District of Columbia ruled that the licenses were part of the bankruptcy estate. The FCC has appealed to the U.S. Supreme Court. Rather than risk an outright loss, the FCC began settlement talks with NextWave. The resulting agreement calls for the government to keep $10 billion of the $15.8 billion raised from the re-auction. The rest would go to NextWave in exchange for abandoning all claims to the spectrum. The agreement expires Jan. 1. Because the government would redirect part of the re-auction payment to NextWave, the deal requires congressional approval. NextWave Senior Vice President Michael Wack said the company expects Congress to act by year’s end. “We will continue working as long as Congress is in session to convince Congress that this is in the public interest,” he said. Signs were everywhere that the settlement is in trouble on Capitol Hill. One source said a spot had been removed in the Defense appropriations bill that was reserved for legislation authorizing the settlement. An appropriations committee official said there are no plans to make space in the bill for NextWave legislation. Attaching the settlement to the defense appropriation was considered the best chance for enacting it by the deadline. Even supporters of the settlement were unsure it would pass. Rep. Bob Barr, R-Ga., who chaired the joint subcommittee hearing, said afterward that while the settlement is in the public interest, there is “no way to know” if lawmakers will act in time to ensure its passage. Others said there is not enough time to thoroughly review the deal. “I’m not sure we will have the capacity by the end of the year to give this the scrutiny it deserves, regardless of whether we are inclined or disinclined to support it,” said Rep. Mel Watt, D-N.C. “I resent the fact that we are asked on an arbitrary deadline to pass legislation,” added Rep. Howard L. Berman, D-Calif. The opposition was bipartisan. “I don’t like this and I’m opposed to it,” said Rep. Ed Bryant, R-Tenn., who said it would be better to let the courts decide the fate of the licenses. Rep. Christopher Cannon, R-Utah, said NextWave investors are unfairly profiting by going bankrupt to retain the licenses rather than following FCC rules and returning the spectrum for re-auction. A few lawmakers endorsed the settlement outright. Rep. George W. Gekas, R-Pa., said the deal is much better than continuing the litigation. “This is a good way to do business,” Gekas said. The House Energy and Commerce Committee will hold a hearing on the agreement Dec. 11. No Senate hearings are scheduled. Ron Orol contributed to this report Copyright (c)2001 TDD, LLC. All rights reserved.

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