WSJ article on NextWave settlement.
(This is actually from AP, even though it was in the WSJ).
November 16, 2001
Tech Center
NextWave, FCC Settle Dispute
Over Wireless Spectrum Licenses
Associated Press
WASHINGTON -- NextWave Telecom Inc. has agreed to sell a large slice of the
nation's wireless spectrum in a deal announced Friday by the federal government
that ends its long dispute with the bankrupt company.
The airwaves will be purchased by the nation's biggest mobile-telephone carriers,
allowing them to improve service in dozens of major U.S. markets.
NextWave won the wireless airwaves in a 1996 government auction, but paid just
$500 million of its $4.7 billion bid before declaring bankruptcy.
The Federal Communications Commission then seized and reauctioned the licenses,
bringing $15.8 billion for the same chunk of spectrum from major
telecommunications companies, including Verizon Wireless, Cingular Wireless,
VoiceStream Wireless and AT&T Wireless Services Inc.
NextWave sued the FCC and, in July, a federal appeals court ruled the government
was wrong to resell the licenses and ordered them returned. The FCC has asked the
Supreme Court to overturn that decision.
But after weeks of intense and complex negotiations, the FCC, NextWave and the
winners of the second auction have reached a $16 billion deal to settle that court
dispute.
"At bottom it is a deal that serves the public interest,
for it will get licenses out from under litigation and
into the market, where the public will benefit from
improved service quality, enhanced coverage and
greater reliability," FCC Chairman Michael Powell
said in a statement announcing the settlement.
Officials at NextWave didn't immediately return a call for comment.
Under the deal, the other carriers would pay the government essentially what they
bid in the second auction for the right to take control of NextWave's licenses,
Verizon spokesman Jeffrey Nelson said. That will allow them to continue their plans
to fill gaps in wireless coverage in dozens of lucrative but overcrowded markets
such as New York, Los Angeles, Chicago, Seattle, San Francisco, Washington and
Philadelphia. Verizon would get by far the largest share of licenses, followed by
AT&T Wireless.
The government would transfer about $9.6 billion of the money to NextWave. After
paying taxes and other fees, investors in the Hawthorne, N.Y.-based company that
never built a network or offered service would walk away with a little over $5
billion, Mr. Nelson said.
The government, which would drop its Supreme Court challenge, would net about
$10 billion for the U.S. treasury -- about $6 billion less than if the second auction
were upheld, Mr. Powell said.
With all the parties aiming to minimize the risk of losing money in the event of
defaults or other legal challenges, a final deal foundered over who would be paid
first and how the money and licenses would be transferred among the entities. As
part of the deal, Congress will be asked to pass legislation that would reinforce the
agreement by funneling all future legal challenges to a federal appeals court in
Washington, Mr. Powell said.
Congress also must give the FCC authority to make the payment to NextWave, said
a source close to the negotiations.
Mr. Powell said required approval from Justice Department is expected.
The deal also may need approval from a New York bankruptcy judge overseeing
NextWave's reorganization plan.
Copyright © 2001 Associated Press
Copyright © 2001 Dow Jones & Company, Inc. All Rights Reserved. |
