Reuters -- U.S., Nextwave Said Near Final Settlement Terms
WASHINGTON (Reuters) - U.S. officials reached a tentative deal with NextWave Telecom Inc. and major
wireless carriers on Friday that clears the way for a settlement of their long-running dispute over valuable airwave
licenses, a source close to the negotiations said.
Attorneys for the parties have begun drafting settlement documents, and a final agreement is expected early next
week, the source said.
"All the hurdles have now been cleared," the source said. "There are T's to cross and I's to dot, and that's it." The
wireless companies, including Verizon Wireless (VZ.N)(VOD.L), partners of AT&T Wireless Services Inc.
(AWE.N), Deutsche Telekom AG (DTEGn.DE) unit VoiceStream Wireless Corp. and Cingular Wireless, would
pay nearly $16 billion for the licenses they won at an auction in January.
Under the hard-fought deal, NextWave would receive $5 billion and the government would get $11 billion, the
source said.
NextWave originally won the licenses at a 1996 auction. A federal appeals court handed the licenses back to
NextWave earlier this year, ruling that the Federal Communications Commission had illegally repossessed them
from the bankrupt company.
Spokesmen for the FCC and NextWave declined to comment.
The agreement reached Friday requires some of the wireless companies to put up letters of credit by January to
serve as collateral and ensure that the federal government will collect enough money to pay off NextWave's $5
billion share of the settlement, the source said.
A few months later -- probably sometime around May or June -- all the wireless companies will be required to pay
for their new licenses in full, the source said. Shortly after that, the government will pay NextWave its share.
As part of the settlement, Bush Administration officials also have pledged to push legislation through Congress that
would clarify the FCC's authority and make provisions to expedite any legal challenges to the settlement, the source
said.
The provisions are designed to assuage concerns by some government officials about an earlier plan which would
have allowed the wireless carriers to pay their billion-dollar tabs in installments. That plan would have put more of
the risk of transaction onto the government.
The dispute stretches back to 1996, when NextWave bid $4.7 billion for the wireless licenses. The company was
unable to complete payment and later entered into bankruptcy proceedings.
The wireless companies bid $15.9 billion for the licenses when the FCC reauctioned them earlier this year. They
hoped to use the spectrum to expand and improve services in markets like Los Angeles, New York, Boston and
Seattle.
But that sale was put in jeopardy when a court ruled the agency's action had violated bankruptcy laws.
Attorneys for the FCC filed a petition last week asking the U.S. Supreme Court to overturn the appeals court
decision, saying it posed a threat to the FCC's auction process.
If approved, the deal reached on Friday would render the case moot and effectively uphold the results of this year's
auction. NextWave would abandon its claim to dozens of wireless licenses.
A settlement could help NextWave pay its creditors, who include Sony Corp. (6758.T) LG InfoComm, CDMA
California Partners and Hughes Network Systems, among others.
18:11 10-26-01
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