D.C. Circuit Finds FCC’s Unlawful Give-Away of Licenses Unreviewable

In a unanimous decision, the D.C. Circuit Court of Appeals this week rejected a claim by small wireless carrier NTCH, Inc. the FCC had unlawfully awarded thousands of licenses to Verizon Wireless in violation of the Communications Act.

The case arose out of Verizon's application in 2012 to acquire numerous licenses from SpectrumCo, a consortium of cable companies. The transaction involved a fairly routine examination of whether the acquisition would give Verizon undue power in various submarkets until the very end of the FCC's review process.

At that point, the agency suddenly issued an order articulating the circumstances by which a common carrier licensee could be relieved of the alien ownership prohibitions of Section 310 of the Communications Act. Three days later, without any prior noticed to the public and on its own motion, the FCC granted forbearance from the alien ownership restriction and approved the SpectrumCo transaction.

The Commission also purported to retroactively forbear from the application of this law to thousands of applications which had been granted to Verizon between the years 2000 and 2012. This action was necessary to legitimize Verizon's past and future acquisitions since Verizon was indirectly 45% owned by a foreign company, Vodafone, which is contrary to the Act.

NTCH, which had challenged the SpectrumCo deal on conventional grounds, cried foul. In a petition for reconsideration, it argued the Commission could not retroactively forbear from application of the alien ownership prohibition, and the agency should also open proceedings to revoke the numerous licenses that had been improperly granted in the past.

The small wireless carrier also asserted the Commission's approval of the SpectrumCo application was erroneous since the Commission had not complied with the rules it had just adopted as necessary for forbearance.

The FCC delayed action on the recon petition for about two and a half years until Verizon had divested itself of the foreign ownership, then declared the matter moot. NTCH promptly appealed to the Court.

The Court rejected NCTH's claims, finding that, although the thousands of licenses may have been improperly granted, the FCC has complete discretion as to whether to revisit that matter. Therefore, the court said, the FCC's decision "not to initiate proceedings to revoke Verizon's licenses is not subject to judicial review."

Further, "any questions about the licenses Verizon obtained before the Spectrum Assignment are not properly before the court," said the Court, although the FCC's Order had specifically addressed those licenses. They further found that the question of whether the FCC had correctly applied forbearance to the SpectrumCo licenses was now moot since Verizon had gotten rid of the offending alien ownership in the years since the FCC had granted the application.

NTCH is considering whether to take the matter to the Supreme Court.

[Ed. Note - Fletcher, Heald attorneys represent NTCH.]