U.S. Supreme Court to hear Alaska Native wireless case

Posted: Wednesday, September 04, 2002

FAIRBANKS - The U.S. Supreme Court will hear the case of a group of Alaska Native corporations seeking to protect their disputed licenses to operate wireless phone businesses in major U.S. markets.

The court will take up the case Oct. 8, according to the court's fall schedule.

Alaska Native Wireless, whose investors include Doyon Ltd., Arctic Slope Regional Corp. and Sealaska, argues that it should have the right to keep the wireless licenses purchased from the Federal Communications Commission.

The group bid $2.8 billion, with partner AT&T providing 90 percent of the total, in the January 2001 auction. Using set-asides and bidding preferences for minority-owned businesses, the group secured licenses in several cities, including New York City, Los Angeles and Denver.

In that sale, the FCC put up for grabs a number of licenses to operate wireless communications on frequencies that had been held by NextWave Telecom Inc. and another smaller company. Those companies failed to pay for the frequencies and went bankrupt.

NextWave challenged the FCC's decision to revoke the licenses arguing that the government can't take such assets without going through bankruptcy court.

Arctic Slope, which is the managing partner of Alaska Native Wireless, and the FCC contend that the government can and should. It makes no sense, they argue, to let a company buy rights to a publicly held frequency, fail to pay and then use bankruptcy laws to hang onto the license.

NextWave, though, argues that one section of the bankruptcy code specifically prohibits the federal government from revoking licenses of those who don't pay.

Alaska Native corporations committed to about $260 million of the original $2.8 billion bid submitted by Alaska Native Wireless. Doyon, the Fairbanks-based regional corporation, put in about $25 million.

The January 2001 auctions drew about $16 billion in bids. Now, though, some winning bidders want out of the deal because the wireless industry has soured so badly. The largest winner in the auction, Verizon, filed a lawsuit in April to invalidate the results for itself and other companies.

The company is also pushing legislation in Congress that would allow it and other winners, such as Alaska Native Wireless, to opt out of the auction terms. Jeffrey Nelson, Verizon's spokesman for wireless public policy issues, said the now-18-month delay in issuing the licenses has destroyed the legitimacy of the auction.

"What has changed is the value of money, certainly in the telecom sector, certainly in the wireless sector," Nelson said. Several more years of delay are still possible, he said. "This is just a huge, huge overhang for the entire industry - $16 billion - that people have to consider," he said. "How can you make good business choices?"

Verizon also wants the remainder of its bid deposit back from the FCC and is suing to get it. The commission returned about 85 percent of the deposits in late March this year.

Alaska Native Wireless has not joined Verizon's suits. It deposited $555 million to back up its $2.8 billion bid. It got about $472 million back in March.

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