CHAIRMAN XXXXXX. And in effect you were invited to bid on some government property that the government no longer owned. It had not been paid for yet, but it no longer owned it; is that right? Xx. XXXXXX. Yes, sir. We did so with our eyes open.
CHAIRMAN XXXXXX. And you knew that it was a risk coming in, and so what we have is a situation where all these enormous bids that were put up at this auction for property that the government no longer owned are literally invalid if the D.C. Court is correct, and if it were upheld, and if we went through all kinds of litigation to the Supreme Court; is that correct? Xx. XXXXXX. Yes, sir, that’s correct. Chairman XXXXXX. So that while this is a nice pot of money that the government would like to pick up, the government has no right to literally if the D.C. Court is correct, has no right to sell some- body else’s property; and that you have literally no legal rights to take that property in that sale until the ownership was settled; is that correct? Xx. XXXXXX. Mr. Chairman, we never took the property. However, I might point out that we are still committed for the $8.8 billion that we bid. Chairman XXXXXX. And in effect the settlement says that yo guys are going to go ahead and all of you bid in this auction for property that the government didn’t own. And you are still going to put up that money, and the government is going to get not just the $4.86 billion that it was promised for in the C-Block auction by NextWave, but it is going to get a substantial amount more. And NextWave is going to be paid something closer to the cur- rent value of its property in the settlement. Is that essentially what we are talking about? Xx. XXXXXX. Yes, sir, I believe that is essentially what we are talking about here, and I think it is very important that we get cer- tainty to this.
CHAIRMAN XXXXXX. Thank you, Mr. Xxxxxxxx. I want to thank you for holding this hearing today, and I particularly want to thank Chairman Xxxxxx for joining us, and for assisting us through this hopefully process where we can conclude with what has been an unnecessarily contentious and drawn out issue. For years, and as you know, Mr. Chairman, I have urged the former Chairman of the FCC to respect the fact that NextWave had a property right in this spectrum, and that having bid through the process by which these licenses were distributed, and having bid properly and then having been in bankruptcy court trying to work out their financial problems, that the FCC had no authority to relicense or to reauction these licenses. Nevertheless, the FCC determined to proceed with Auction 35 and eventually the D.C. Court concluded as I thought they would that NextWave had a property right here. The FCC, nor any Fed- eral Agency, could not simply cancel or take it away. So, here we are. We are in a situation where after all of these many, many, months, when in prior months and prior years the FCC could pos- sibly have settled this in a way that respected the property rights of the parties, and at the same time put the spectrum to good use and perhaps collected the money that the government was owed, we are now at a point in time when we have another opportunity to do all those things in a settlement. I agree with you that this is not the prettiest nor the cleanest necessarily way, or the easiest way to resolve all these difficult issues, but it does put them all to rest. Xx. Xxxxxxx has put his finger on it. This gets the spectrum out for the American public to enjoy. This satisfies the government’s obligation to collect its money and to plug a hole in a budget which needs to be plugged. And at the same time respects the property rights of the parties, which the
CHAIRMAN XXXXXX. Reserving the right to object, I simply want to indicate for the record that Xx. Xxxxxxx and Xx. Xxxxxx dis- cussed with me the process by which this letter was sent to Xx. Xxxxxx. And I encouraged them to send it, and encouraged obviously that we get all these answers on the record so that we might have a full record on this matter as we go forward, and I want to thank Xx. Xxxxxx and Xx. Xxxxxxx for their efforts here. Xx. XXXXXX. Thank you, Mr. Xxxxxxxx. Chairman XXXXXX. And I do not object, Mr. Chairman. Xx. XXXXX. I yield back my time, Mr. Xxxxxxxx. Xx. XXXXX. The gentleman’s time has expired. Ms. XxXxxxx.
CHAIRMAN XXXXXX. Thank you, Mr. Xxxxxxxx. Xx. Xxxxxxx, let me first thank you for your analysis in your testimony on page two, in which you do a much better job than I tried to do in outlining the failure of the C-Block auctions, and many of the reasons why they failed. And particularly I had not remembered this, the fact that A and B-Block auctions occurred 11⁄2 years prior to C-Block, and therefore the largest cellular companies already had their spectrum and were already deploying it by the time that smaller companies, like yours and others, were invited to a C-Block auction. And the other point that you raised that the bidding credits were essentially nullified in the process, which made it even more dif- ficult for smaller bidders to meet their financial obligations in the bids. All of that contributed as you pointed out to what should have been a predictable failure of that process, correct?
CHAIRMAN XXXXXX. And you chose instead to take a risk and to put this money up to get this spectrum, and you must have some awful big needs for that spectrum out there? Xx. XXXXXX. We have great need for the spectrum, not only to meet our capacity needs in major cities across the United States, but also to roll out 3-G spectrum, and one of the things that I have said to this subcommittee before is that I believe that we are fall- ing behind our foreign competitors. Chairman XXXXXX. I know that my time has expired, and I am going to end, Mr. Chairman. We don’t have a lot of members here, but I want to end on this note, because Xx. Xxxxxx has made an ex- cellent point here. We are talking about spectrum that is apparently going to be used for third generation wireless, and I don’t know if Americans fully understand the implications of third generation wireless yet, or the fact that most European countries are already way ahead of us in licensing out third generation spectrum. And companies in Europe and other parts of the world are busy building the software and hardware that is going to manage these systems, and provide incredible new services for people. But we are talking about incredible new wireless devices that are going to allow us to communicate much more readily and reliably in not only good times, but in tough times, like September 11 inci- dents. And it will give us a chance to literally stay connected in this country in a new highly dense sort of communications wireless sys- tem called Third Generation. Without this spectrum out there, and companies like yours investing in it, we are not only behind Europe and other parts of the world, we are desperately behind them; is that not correct? Xx. XXXXXX. I think that is accurate, yes, sir. Chairman XXXXXX. Thank you, Mr. Chairman.
CHAIRMAN XXXXXX. Thank you. 12 COMMISSIONER XXXXXX: And I think, you know, my 13 reasoning for that, I think it's pretty evident that the 14 testimony was that there were capacity costs that were 15 locked in through 2014, and so it's only right that we 16 begin escalating that in 2015. 17 CHAIRMAN XXXXXX: Any further discussion on this 18 motion? 19 Commissioner Xxxxxx.
CHAIRMAN XXXXXX. I agree wholeheartedly. Thank 2 you for your comments. 3 Any further discussion on the motion? 4 Hearing none, Commissioner Xxxxxx. 5 COMMISSIONER XXXXXX: Xxxxxx votes aye. 6 CHAIRMAN XXXXXX: Commissioner Xxxxxx. 7 COMMISSIONER XXXXXX: Aye. 8 CHAIRMAN XXXXXX: And Xxxxxx votes aye. The 9 motion carries. 10 The second item before us is that the Commission 11 voted unanimously to reconsider the decision to use 2 and
CHAIRMAN XXXXXX. Commissioner Xxxxxx. Excuse 18 me. Could I make a clarification first? 19 Commissioner Xxxxxx, you said that -- and
CHAIRMAN XXXXXX. All right. I don't have 6 Xx. Xxxxxx' sheet in front of me, but thank you.
