Completed wireless auction faces some challenges

<br>WASHINGTON (AP) _ A small telecom company that scooped up one of three valuable licenses for offering wireless service in New York city's high-demand market is the subject of a challenge to a recently

Tuesday, March 13th 2001, 12:00 am

By: News On 6

WASHINGTON (AP) _ A small telecom company that scooped up one of three valuable licenses for offering wireless service in New York city's high-demand market is the subject of a challenge to a recently completed government auction.

But by and large, the Federal Communications Commission auction, which reaped a record $16.86 billion, drew little opposition on an issue that became contentious during the process: some companies that won licenses specially set aside for small businesses had ties to industry giants.

The challenges to the auction had to be filed by Friday and were made public Monday.

One petition filed by TPS Utilicom Inc., asks the government not to grant licenses to Alaska Native Wireless, which won licenses in New York and elsewhere, because of that company's ties to powerhouse AT&T Wireless.

TPS charges that Alaska Native is not eligible for very small business status or special entrepreneur discounts because of its links to AT&T.

But a lawyer for Alaska Native Wireless asserted that its partnership falls within the commission's rules because AT&T does not have legal or practical control of the company. The company is confident that it has met the standards laid out by the FCC for this type of arrangement, the lawyer said.

TPS Utilicom argues that the government should not grant licenses to DCC PCS Inc., which also has links to AT&T, on similar grounds.

AT&T declined to comment.

The small companies that partnered with larger industry players have long argued that such arrangements are necessary to give them enough capital to compete in the auction and prevent them from defaulting on their payments, as other small businesses have done in previous auctions.

The January auction included licenses bid on several years ago by NextWave Personal Communications, which later went bankrupt and missed deadlines to pay for the licenses.

The FCC reclaimed the licenses and re-auctioned them. But NextWave has mounted a legal challenge to get the licenses back, saying it can now pay for them.

NextWave also filed a petition, made public Monday, asking the government to hold off on granting the licenses won by bidders until its litigation is resolved. The U.S. Court of Appeals for the District of Columbia is set to hear oral arguments this week as NextWave seeks to get its licenses back.

Several other companies, that also had their licenses revoked by the FCC after failing to pay on deadline, are still contesting the decision by the commission to cancel those licenses and re-auction them to new bidders, according to the filings.