Court refuses to delay August
wireless auction

By Jeremy Pelofsky

A U.S. appeals court refused on Thursday to delay the August sale of valuable wireless airwaves despite concerns raised by some smaller carriers.

Council Tree Communications Inc. and others had sought a stay to block the auction from starting until the court could rule on Federal Communications Commission rules aimed at limiting eligibility for discounts during the sale.

The FCC is slated to begin auctioning the licenses for advanced wireless services on August 9 in a sale analysts have said could raise $8 billion to $15 billion.

The agency offers discounts of up to 25 percent depending on a company's financial position, a move that was designed to encourage smaller entrepreneurial companies to participate. However, some have struck partnerships with national carriers.

Small bidders like Council Tree had worried the new rules would make it difficult to get financing to fund their bidding and thus barred from the auction.

However, the U.S. Court of Appeals for the Third Circuit said Council Tree and the other petitioners failed to establish that they would suffer irreparable harm without a delay and other bidders have indicated a willingness to participate despite the new restrictions.

"The public interest also militates strongly in favor of letting the auction proceed without altering the rules of the game at this late date," the three-judge panel said in its decision.

The FCC in April adopted rules aimed at limiting big wireless carriers from taking advantage of the discounts by partnering with smaller eligible bidders.

Under the new regulations, a license holder that leases or resells more than half of the spectrum capacity of a license would be ineligible for the discounts.

The agency also decided that a company that qualified for the discounts would have to repay some or all of that money if they sell the license within 10 years to an entity that was not qualified for the discounts.

However, the court noted that already 166 of the 252 initial bid applicants claimed they were eligible for discounts, a sign that participants were adjusting to the new regulations.

"We are pleased the advanced wireless auction will proceed on schedule furthering the goal of providing new and better wireless services to American consumers," said FCC spokesman David Fiske.

Copyright © 2006 Reuters Limited.