The Federal Communications Commission has denied TeleSTAR Inc. in Orem permission to build a telecommunications network, angering a Utah congressman with the decision that could destroy the struggling Utah County firm.

In a decision adopted last week, the FCC upheld an agency administrative law judge who two years ago found TeleSTAR violated FCC rules by constructing microwave stations without proper FCC permission.The commission also found TeleSTAR "submitted patently false information as a result of its deficient certification practices" and "made misrepresentations of material facts and exhibited a lack of candor."

The decision has upset Rep. Jim Hansen, R-Utah, who believes the FCC is working in complicity with industry giants to drive TeleSTAR out of business.

"Based on the experiences I have had, I am convinced there are some things wrong down there. At the very least there is some heavy incompetence," said Marcia Ford, an administrative aide for Hansen who has been monitoring the case.

"These guys (TeleSTAR) are victims of an FCC that's not acting properly."

Hansen requested earlier this year that a House panel investigate the FCC's handling of the TeleSTAR case. Ford said the investigation is under way and that other members of Utah's congressional delegation have pledged their support for the probe and voiced similar concern about the FCC's final ruling.

TeleSTAR president and founder Noel Stewart called the FCC decision "appalling" and he plans to appeal it. But the prospects of winning an appeal may or may not bode well for him, when a federal bankruptcy judge considers a motion next week to place TeleSTAR in liquidation.

If anything good came from the ruling, Stewart said, it was that he finally knows what his options are for TeleSTAR's future. His enterprise has been held in limbo for three years and forced into bankruptcy as his appeal to the initial decision wound its way to the top level of the FCC.

Problems arose for TeleSTAR in 1985 when MCI Telecommunications Inc. and Western TeleCommunications Inc. complained to the FCC that TeleSTAR failed to apply for FCC permits before constructing a telecommunications system between Salt Lake and Denver.

A commission administrative law judge found TeleSTAR guilty of intentionally violating FCC rules and denied the firm's applications to operate. TeleSTAR then filed similar complaints against MCI, resulting in the FCC fining MCI $10,000.

But, it was the FCC's handling of both cases that upset TeleSTAR and Hansen. While TeleSTAR had its application denied and its appeal on hold for three years, Hansen and Stewart complain, MCI was slapped with a fine levied without a hearing or the normal FCC process and allowed to continue operating.

Furthermore, Stewart contends that the administrative law judge and full commission have ignored an opinion of the agency's Common Carrier Bureau saying TeleSTAR's failure to comply with FCC rules was inadvertent and the firm should be granted a license to operate.

Stewart said in addition to his appeal of the FCC decision to a federal circuit court of appeals in Washington, D.C., TeleSTAR is planning a $500 million federal lawsuit against MCI, as well as pursuing additional charges of violations by MCI and a circuit court appeal of the FCC's handling of the previous MCI case and fine.