[OKDXA] FYI:

[Nelson Derks]

Although this doesn't directly affect Amateur Radio... At the moment...
Let's recall there was a time when the Ether was considered a shared
resource owned equally by all citizens. Licenses were granted to trustees
who pledged to operate "in the public interest, convenience and necessity".
(Radio Act of 1934)

What this decision tells me is that a license granted by auction now remains
the property of the licensee, even if the bidder defaults on their payments
and cannot use the frequency for its licensed purpose. If a licensee can
retain their license throughout a bankruptcy, they can also freeze out
anyone able to put the allocation to good use for the duration of the
proceedings... Which may open the door to all sorts of corporate mischief.

Let's say companies A, B and C are bidding on a 'choice' allocation. Company
C wins the auction, but is a covert subsidiary of Company A and exists only
on paper. The shell company goes bankrupt, defaults on its payments, retains
the licenses and then, after a respectable amount of time, sells the
licenses back to Company A for pennies on the dollar. Not only did Company A
buy cheap (in exchange for their patience), but Company B was either
excluded or forced into a less desirable allocation. Another variation might
be where two companies bid for the same slots. The winner files bankruptcy
and ends up retaining the licenses for significantly less than what the
other company bid. What can they do with the frequencies if they have no
cash to put a signal on the air? Lease the 'air time' back to the other
company... No hardware overhead, no maintenance, just cash the checks and
keep the lawyers paid.

- AC5UP

----------------------

WASHINGTON, Jan. 27 � The United States Supreme Court ruled today, in a case
of great importance for the telecommunications industry, that the federal
government was wrong when it took back wireless communications licenses from
a bankrupt company in 1998.
The 8-to-1 decision was a defeat for the Federal Communications Commission
but a victory for NextWave Telecom of Hawthorne, N.Y., which had won the
licenses at auction but lost them when it fell behind in its payments.

Government lawyers had argued that the F.C.C. had the right to repossess the
licenses, despite NextWave's filing for bankruptcy protection, because the
agency was acting not as a creditor but as a regulator.

But Justice Antonin Scalia, writing for the majority, rejected the
government's arguments. "The whole issue before us can be described as
asking what the Bankruptcy Code's promise of a `fresh start' consists of,"
Justice Scalia wrote.

The F.C.C. had asserted that it was acting in the public interest when it
moved to take back the licenses to provide high-speed wireless data and
voice communication services to consumers and businesses in 95 cities, for
which NextWave had promised to pay more than $4 billion. Therefore, the
agency argued, it could not be deemed to be motivated "solely" by NextWave's
insolvency.

Justice Scalia rejected that rationale, saying that the F.C.C.'s stance
amounted to "administrative preferences" that could not be used to deny the
company "rights provided by the plain terms of a law."

--- more ---

Justice Stephen G. Breyer, the only justice who showed any sympathy for the
government's position when the case was argued on Oct. 8, was the sole
dissenter today. He said the majority's holding threatened to put the
government at a disadvantage when compared to car dealers, home developers
and appliance companies.

"Why should the government (state or federal), and the government alone,
find it impossible to repossess a product, namely a license, when the buyer
fails to make installment payments?" Justice Breyer wrote.

http://www.nytimes.com/2003/01/27/business/27CND-BIZC.html