Favorable nextwave ruling
Friday June 22 11:08 AM ET
Court Rules for NextWave on Wireless Licenses
By Jeremy Pelofsky
WASHINGTON (Reuters) - A U.S. appeals court ruled on Friday that regulators violated
bankruptcy rules when they repossessed valuable wireless licenses from NextWave when the
company went bankrupt, potentially grabbing the coveted spectrum of licenses back from other
companies who won them in a re-auction.
The Federal Communications Commission (news - web sites) repossessed 90 licenses NextWave
won at auction in 1996 after the company was unable to pay on time the $4.7 billion it bid for the
licenses and eventually entered bankruptcy protection.
``We conclude that the commission violated the provision of the bankruptcy code that prohibits
governmental entities from revoking debtors' licenses solely for failure to pay debts dischargeable
in bankruptcy,'' the U.S. Court of Appeals for the District of Columbia said in its ruling.
The airwaves were resold as part of a larger auction in January in which wireless operators paid
$16.9 billion. Verizon Wireless asked the FCC (news - web sites) to withhold granting the licenses
and requiring payment until the NextWave appeal was resolved.
``The commission, having chosen to create standard debt obligations as part of its licensing
scheme, is bound by the usual rules governing the treatment of such obligations in bankruptcy,''
said Judge David Tatel, writing for the three-judge panel.
A spokesman for the FCC had no immediate comment. The agency could appeal the ruling to the
Supreme Court or seek a hearing by the full D.C. appeals court.
A spokesman for NextWave was not immediately available for comment.
The ruling was a surprise because NextWave had lost most of its appeals court challenges,
including at the U.S. Supreme Court (news - web sites). The FCC said when the airwaves were
auctioned that if it lost in the courts the disputed licenses would be returned to NextWave.
Verizon Wireless, the nation's biggest mobile phone carrier, won 101 licenses after bidding $8.78
billion followed by Alaska Native Wireless which has ties to AT&T Wireless Group Inc.
(NYSE:AWE - news) and bid $2.89 billion for 44 licenses.
In 1996 NextWave won a slew of licenses that cover coveted locations such as Boston, New York
and Los Angeles, among other cities, in an auction that was designed to encourage upstart wireless
firms to grow and compete.
However, the company was unable to come up with the funds to pay for the coveted airwaves,
leading the FCC to repossess them for nonpayment. |
