FiberTower, FCC in Court in Dispute Over Agency's Substantial Service Rules
The FCC Wireless Bureau told a federal appeals court that the FCC was justified and acting within its rules in 2012 when it decided FiberTower had not demonstrated that it was providing substantial service for 689 of its 24 GHz and 39 GHz licenses and the licenses should be revoked. The case is before the U.S. Court of Appeals for the D.C. Circuit.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
FiberTower, which was launched to offer wireless backhaul, sought to overturn an order cancelling the licenses. In August, the company said in brief filed with the court that the FCC acted on both a “fundamentally flawed conception of ‘substantial service’ and material factual errors” and that the order was “arbitrary and capricious, an abuse of discretion, and not in accordance with law or the public interest.”
FiberTower said it had spent more than $300 million building out its backhaul network. “The Commission acknowledged that FiberTower devoted significant time, energy, and capital to developing its licenses and the market for those licenses, but nonetheless accorded those activities no weight,” the company said. In doing so, the FCC “impermissibly flouts the terms and purpose” of the Communications Act, FiberTower said. The FCC also erred in failing to examine why granting even a limited waiver would serve the public interest, the company said. “The decision did not grapple with the many ways that FiberTower’s research and development and leasing activities were innovative, unique, and had served and would continue to serve the public interest.”
The FCC also gave only “lip service” to the issues that complicated FiberTower’s buildout, including the 2008 financial collapse and postponements of wireless carriers’ roll-out of next-generation networks, the company said. “The Commission’s narrow and rigid reconception of substantial service, which turns exclusively on construction and transmission, misunderstands market forces that create and sustain 24 and 39 GHz backhaul networks, and misconstrues Congress’s mandate.”
FiberTower acknowledged it filed for Chapter 11 bankruptcy protection in July 2012. But the company said as long as it held the licenses it “maintained a pathway for restructuring the company around its industry-leading technology and customer-development efforts in the 24 and 39 GHz bands.’
The FCC fired back in a brief posted by the agency Wednesday (http://bit.ly/ZZL9dv), saying FiberTower had 11-15 years to build out its licenses. “The company never built facilities for those licenses, let alone initiated service to the public,” the FCC said. “No service is not service, much less substantial service.” The FCC acted reasonably in denying a further waiver, it told the court. The commission “reasonably determined” that any public-interest benefits from granting another waiver “were outweighed by the spectrum warehousing that could result from the agency’s failure to enforce its build-out requirements,” the FCC said.
FiberTower mischaracterized commission precedent, the FCC said. Agency policies and rules provide licensees a great deal of flexibility in the timing and the amount of construction required to demonstrate substantial service, but those rules have never eliminated altogether the construction requirement, it said. The agency reminded the court that the commission’s “reasonable interpretations of its own rules and policies are entitled to special deference.”