Nextel.....
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From the October 11, 1999, issue of Wireless Week
Nextel, DOJ Show Congress The Money
By Caron Carlson
WASHINGTON--Responding to a congressional investigation into the confidential spectrum agreement Nextel Communications Inc. signed with the government in
August, the Department of Justice and Nextel, like the FCC before them, began with a discussion of money--something every lawmaker relates to.
Nextel Chairman Daniel Akerson opened his Oct. 1 response to the House Committee on Commerce by describing the "substantially enhanced recoveries" the
government and other parties would receive from Nextel's plan to take over the PCS licenses held by bankrupt NextWave Personal Communications Inc.: "[T]he
FCC would receive a minimum cash consideration of approximately $2.1 billion, twice the amount it would receive under the NextWave debtors' plan of
reorganization." (Emphasis not added.)
Similarly, the Justice Department's acting assistant attorney general, Jon Jennings, points out in his opening paragraph, in a letter also filed Oct. 1, that NextWave
owed the government more than $4 billion when it filed for bankruptcy protection. Jennings notes in the next paragraph that Nextel's proposal "would result in a
recovery for the government far greater than that proposed by NextWave."
The bold appeal to congressional budgetary sensibilities appears somewhat incongruous with the focus of the investigation, not to mention with the FCC's virtual
mantra that the goal of a spectrum auction is not the revenue it generates. The Commerce Committee and numerous industry players have questioned not so much
the end result of Nextel's Aug. 10 pact, but rather the means used to achieve that end. In other words, most of the puzzlement engendered by the pact focuses on the
process leading to it, not on its merits, fiscal or otherwise.
Akerson told the Commerce Committee that Nextel initiated negotiations leading to the agreement. The company sought "to advance a number of public interest
goals of the Congress and the FCC," he said, figuring that the FCC's litigation over NextWave's licenses would prevent the spectrum from being used in the
foreseeable future.
While Nextel publicized in mid-August that it had received the government's "endorsement" of its latest spectrum acquisition plan, it turns out all it had done was "to
engage parties in discussions regarding possible resolution of the NextWave Chapter 11 cases ...," according to Akerson. He agreed with the Commerce Committee
that Nextel is not a party in interest in the NextWave case and therefore has not submitted a plan.
All parties to the pact emphasize that the government is not obligated to support Nextel's pursuit of NextWave's spectrum--in other words, no deal has yet been cut.
None of the parties have mentioned, however, that if Nextel's plan is eventually submitted for consideration and another carrier tops it, the government has already
agreed that Nextel, and only Nextel, will receive an exclusive termination fee worth millions of dollars.
The U.S. Court of Appeals for the 2nd Circuit is scheduled to begin hearing the NextWave case Nov. 1. |
