Text of Washington Post NextWave settlement article :
NextWave Reaches Deal Over Disputed Spectrum
By Christopher Stern
Washington Post Staff Writer
Tuesday, October 16, 2001; Page E01
The nation's major mobile telephone companies have reached an agreement with NextWave Telecom Inc. in which
they would pay almost $16 billion to end a five-year dispute over a slice of airwaves, industry sources said yesterday.
Under the terms of the deal, the wireless companies would divide up the spectrum that NextWave won in a 1996
auction by the Federal Communications Commission but never paid for. NextWave will retain none of the spectrum,
but investors in the firm, which has been in bankruptcy proceedings since 1998, would end up with $5 billion after
paying off debts and taxes. The federal government would be paid $11 billion.
The agreement, which was presented for approval to the FCC last night, also calls for the four major wireless
companies that brokered the deal to support special legislation designed to protect the agreement from court
challenges.
The agreement would result in a huge windfall for the privately held NextWave, which bid $4.8 billion for the
spectrum but made only a $500 million down payment.
If approved, the deal effectively upholds the results of an auction the FCC held earlier this year in which Verizon
Wireless and companies controlled by Cingular Wireless, AT&T Wireless Services Inc. and VoiceStream Wireless
Corp. bid a total of $15.8 billion for NextWave's spectrum.
That auction was later nullified by a federal court, which ruled that the FCC had improperly seized NextWave's
spectrum and resold it in violation of federal bankruptcy law. The FCC has until Friday to decide whether to appeal
that decision.
The wireless firms are eager to use the airwaves now controlled by NextWave to free up the mobile communication
congestion in some of the nation's largest metropolitan areas, including Washington, New York and Los Angeles.
Sources say NextWave is eager to reach a signed deal before Monday, when it has its next date in bankruptcy court.
In addition, the companies want time to get the special legislation considered by Congress.
Under a deal brokered during conference calls last weekend, Verizon would be allowed to delay until May 31 paying
a portion of the $8.5 billion it bid in this year's auction. Verizon said it sought the delay because the overall weakness
of the economy makes it difficult to raise capital.
One industry analyst cautioned against considering any deal wrapped up that requires congressional review at the end
of a session. "This raises the question about whether Congress says 'No' or 'Stand in line,' " said Blair Levin, an
analyst with Legg Mason Inc. and a former FCC staffer.
But industry sources were confident the FCC and Congress would approve the deal because it means an $11 billion
boost to the federal treasury. One predicted that the legislation could be justified as part of an economic stimulus
package or as part of the nation's anti-terrorism efforts.
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