MCI, NextWave prove bankruptcy can be good business

With so many things happening in telecom regulation, I've decided to take a page from retired Texas sportwriting legend Blackie Sherrod, whose "scattershooting" columns were a staple for millions of readers every week.

Scattershooting while wondering whatever happened to all those vendors I interviewed in 2000-2001 whose business plans were based largely on the fact they were in trials with WorldCom at the time...

Speaking of WorldCom--er, MCI--company president and CEO Michael Capellas said Tuesday should be a "day of celebration" as MCI officially emerged from bankruptcy. Certainly, congratulations are in order to all the employees who have helped steer the carrier back on track.

But I hope Capellas understands that many outside the company probably aren't in the mood to celebrate the resurrection of a carrier whose $11 billion accounting fraud directly and indirectly cost hundreds of thousands their telecom-related jobs during the past few years. And I'm pretty sure there are more than a few carriers still grumbling that the nation's forgiving bankruptcy laws mean they now must compete against an MCI that is virtually debt-free, despite its past indiscretions...

Another company that seems primed to emerge from bankruptcy is NextWave Telecom, which this week agreed to settle its controversial spectrum dispute with the FCC, a dispute that existed only because NextWave declared bankruptcy before the agency tried to reclaim the airwaves for missed payments.

Under the settlement proposal, the government says it hopes to receive "at least $4 billion" after auctioning much of the airwaves held by NextWave, which is expected to resell ultra-valuable New York airwaves to show a tidy profit after years of spectrum speculation.

At this point, any deal that resolves this ugly mess puts money into the U.S. Treasury and makes the spectrum available for use is welcome. However, federal lawmakers have to be kicking themselves.

Remember, in December 2001, there was deal on the table that would have netted the government $10 billion and allowed winners of the January 2001 auction to use the airwaves to offer advanced services. But Sen. Ernest Hollings (D-S.C.) led Congressional opposition that blocked the deal, characterizing the notion of paying NextWave $5.85 billion as a "scam" that would set a dangerous precedent.

In hindsight, it proved to be a costly position. Two-and-half years later, the spectrum remains unused, the government lost a Supreme Court case and the amount of money that eventually will put into federal coffers has decreased by more than $5 billion...

I know this is like comparing apples and oranges from a legal perspective, but the question begs to be asked: Doesn't it seem odd that two Supreme Court justices can consider the NFL draft status of Ohio State football player Maurice Clarett in a 48-hour window when there is considerable doubt whether the high court will deem its time worthy of considering UNE rules and the classification of broadband offerings--cases that could change the face of telecom, affecting hundreds of millions customers and employees?...

Finally, the latest speculation is that the industry-led Intercarrier Compensation Forum will unveil its bill-and-keep proposal within the next few weeks. In terms of content, it will be interesting to see whether the proposal does anything to appease rural carriers. Perhaps more intriguing will be which government entity gets targeted initially with the proposal.

The FCC might seem to be a natural choice, but it has no jurisdiction over intrastate access charges, which arguably are the most crucial pieces to the intercarrier-compensation puzzle. That falls under state jurisdiction, but getting 50 state commissions to agree on anything is an uphill battle, to say the least. Theoretically, Congress may be the best place to address this thorny issue, but it's a roll of the dice whether anything would get passed, much less a law that the industry supports.

E-mail me at djackson@primediabusiness.com