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News :: Miscellaneous |
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Money for Nothing |
Current rating: 0 |
by Vikki Kratz, CRP
(No verified email address) |
19 Dec 2001
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How a Bankrupt Telecom Company Got $6 Billion from the U.S. Government
Another Congressionally-sponsored rip-off of the taxpayer. Watch how US Rep. Tim Johnson votes on this one when it comes back after the holidays. Which it surely will, because money, not justice, is the determining factor in US politics. |
WASHINGTON - December 17 - When Congress adjourns in the next few days, it will likely do so without approving a special deal between the federal government and a bankrupt telecom company.
Last month the Federal Communications Commission agreed to a deal that would settle the question of who owns 90 wireless spectrum licenses. NextWave Telecom originally won the licenses in 1996 by bidding $4.7 billion in an FCC auction. But NextWave only paid about $500 million of its $4.7 billion tab before it declared bankruptcy in 1998. Since then, the licenses have sat in bankruptcy court, while the wireless communications market has exploded and available spectrum for cell phones and pagers has rapidly declined. Last winter, a federal judge decided the licenses belonged to the FCC and allowed them to be auctioned off again. This time, 36 companies, including Verizon Wireless and Cingular Wireless, bid nearly $16 billion for the spectrum. NextWave Telecom appealed, and during the summer a judge overturned the FCC auction, ruling that the licenses still belonged to NextWave.
Facing the possibility of a long, drawn out court battle, the FCC decided to strike a deal. In return for the licenses, NextWave and its investors would get $6 billion from the second auction, leaving the government to pocket the remaining $10 billion. For the deal to become official, however, Congress has to approve it before a December 31 deadline. Rep. Billy Tauzin (R-La.), chairman of the House Commerce Committee, introduced legislation last week that would approve the NextWave deal. But Senate Commerce Committee Chairman Ernest Hollings (D-S.C.), together with ranking Republican John McCain (Ariz.), oppose the deal. "This proposal will benefit lobbyists," McCain told Congressional Quarterly. "They will get not thousands of dollars, but millions."
An analysis of the lobbying reports for the first six months of the 2001 show McCain’s prediction is right on the money. SBC Communications, which owns 60 percent of Cingular Wireless, has spent about $3.6 million on its in-house lobbying operation, indicating on its lobbying report that some of the money was targeted specifically for lobbying on the NextWave deal. AT&T is financially backing Alaska Native Wireless, which won a share of the spectrum in the FCC’s second auction. AT&T’s lobbying reports show that it has spent about $120,000 so far in 2001 specifically on the NextWave issue. Verizon Wireless, which bid more than $8 billion for its share of the spectrum, has spent about $160,000 lobbying on the NextWave deal so far this year. And Bay Harbour Management, one of NextWave’s investors, hired former Republican National Committee Chairman Haley Barbour as its lobbyist, paying his firm, Barbour, Griffith & Rogers, $1.2 million in 2000. NextWave itself paid half a dozen lobbying firms, as well as its own in-house lobbying operation, at least $660,000 in 2000. So far in 2001, the company has spent less than $40,000.
Campaign contributions have been flowing just as freely as the lobbyist dollars. Allen Salmasi, NextWave’s CEO, and his wife, Nicole, contributed $49,000 in 1999-2000 to political candidates and their leadership PACs, 69 percent to Democrats. Salmasi also gave $10,000 to Sen. Robert Torricelli’s legal defense fund. Torricelli (D-N.J.) reportedly filed a legal brief supporting the company in its appeal over the summer. Nicole Salmasi’s company, Beetrendy.com, contributed $25,000 in soft money to House Majority Leader Dick Armey’s PAC in 2000. Rep. Armey also received $25,000 from Cerberus Partners, one of NextWave’s investors. Armey has come out in favor of the FCC’s deal with NextWave.
Another NextWave investor, Global Crossing, has given more than $637,000 in individual, PAC and soft money donations so far in 2001, 64 percent to Democrats. Global Crossing is currently one of the top ten soft money contributors in 2001 and ranked 23rd overall among top contributors in the 2000 elections, with more than $2.8 million in contributions. Other NextWave investors include Qualcomm Inc., which gave nearly $29,000 in individual and PAC donations, 52 percent to Republicans; and Bay Harbour Management, which contributed $11,500 in individual and soft money donations, all to Democrats, in 2001.
The three dozen companies that finally bought the spectrum also chipped in their share of campaign contributions. Verizon Wireless has contributed nearly $600,000 in individual, PAC and soft money donations so far in 2001. Its rivals, Cingular Wireless and Voicestream Wireless, have given about $85,000 each over the same period. Cingular Wireless’ parent company, SBC Communications, has given more than $975,000 in individual, PAC and soft money so far in 2001. AT&T, which is backing Alaska Native Wireless, has contributed $1.2 million in individual, PAC and soft money donations so far in 2001.
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See also:
http://www.opensecrets.org/
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