August 3, 2001
Verizon Partner Makes an Offer
For NextWave Wireless Licenses
By Mark Wigfield
Dow Jones Newswires
WASHINGTON -- A small mobile phone start-up, working for a giant, has made an offer for valuable spectrum licenses owned by NextWave Telecom Inc. that have been tied up in a five-year bankruptcy dispute.
Called Valley Communications, the company in partnership with the nation's largest wireless provider, Verizon Wireless, is prepared to offer NextWave between $3 and $4 billion for a portion of its licenses, people familiar with the matter said.
The offer comes little more than a week after Verizon, a joint venture of Verizon Communications and Vodafone Group PLC, and other top wireless companies made a separate offer for all of the licenses in an effort to resolve the legal battles that have tied up the valuable airwaves since they were first auctioned in 1996.
Valley Communications would be run by wireless industry veteran James A. Dwyer of Fort Myers, Fla. Mr. Dwyer was president of Wireless One Network of Florida, recently bought by AT&T Wireless Services Inc., and founded the wireless industry's trade association, now called the Cellular Telecommunications and Internet Association.
Latest Twist
Neither NextWave nor Mr. Dwyer nor Verizon could be reached immediately for comment. But his offer is the latest twist in a story that began in 1996, when NextWave made a winning bid of $4.7 billion for the nationwide network of wireless licenses in a Federal Communications Commission auction.
The auction was reserved for small start-ups and entrepreneurs, who were allowed to pay on the installment plan. However, NextWave's financing fell through and it was unable to pay. Although NextWave filed for federal protection, FCC canceled NextWave's licenses and put them up for auction again late last year.
The auction raised a record $17 billion, about $16 billion of which were the former NextWave licenses. Verizon was the top bidder at $8.7 billion as it aggressively sought licenses in New York City and other major markets to accommodate its rapid expansion.
But on June 22, the U.S. Court of Appeals ruled that the FCC lacked the authority to trump NextWave's federal bankruptcy protection, and returned the licenses to the company. NextWave has said it plans to build out the network for mobile wireless data, a pronouncement that has been viewed skeptically by analysts and other wireless companies.
FCC Considers Options
The FCC is still considering its legal options. Meanwhile, NextWave backers like Global Crossing Ltd. are waiting reorganization of NextWave by the Federal Bankruptcy Court in New York.
Valley would be an entity similar to those that bid in conjunction with other big players in last year's re-auction of the NextWave spectrum.
The FCC had revised its rules for the auction, eliminating the disastrous installment plan but reserving some of the airwaves for start-ups, and opening the rest up to all bids. But Cingular Wireless, a partnership between BellSouth Corp. and SBC Communications Inc., was able to bid effectively for all the spectrum by striking up a partnership with the Salmon PCS, formed at the time of the auction. AT&T had a similar relationship with Alaska Native Wireless, as did other companies.
Verizon was the only player that stayed out of the auctions set aside for start-ups. But the company has said it fears that if NextWave eventually sells off its licenses, the old auction rules will apply and only start-ups will be eligible to buy the licenses.
Valley intends to buy from NextWave licenses in major markets that Verizon had pursued in the auction last year, including New York, Boston, and Los Angeles, sources said. But NextWave would still be left with enough spectrum to build its own network.
Write to Mark Wigfield at mark.wigfield@dowjones.com |
