I'm amazing! Cool! Thanks for the compliment.
As to whether the right to use particular spectrum is property or not, it's akin to a lease on land which the government owns. Of course NextWave doesn't own the spectrum. They have been given possession of it for a certain period of time, subject to certain terms and conditions. As you say, this is like QUALCOMM's licensees leasing QUALCOMM's intellectual property under certain terms and conditions for a certain period of time [which I believe is in perpetuity].
I haven't read the fine print so am depending on the courts as to whether NextWave and the creditors have a right to the use of the spectrum in the event of bankruptcy and other circumstances surrounding NextWave's possession of the property.
Judging from the value given to NextWave right now and the settlement agreed by the FCC and other interested parties and the decision by whichever court it was, and all the barking going on, I think it's a pretty reasonable bet that there really is a rat in the drain.
Senator Hollings argument seemed to amount to 'you can't muck around for that long then give us a week to decide, just before Xmas'. He also quoted some part of the license, which in isolation, made sense.
Depending on the terms of the lease, courts might indeed be right to protect other creditors by reducing the lease payments. Whether that applies to QUALCOMM's licensees would depend on the terms of the agreements. I suppose the QUALCOMM contracts include agreements to the effect that 'in the event of bankruptcy, the agreements is terminated'. We'd have to read the fine print.
I'm just judging from the court decision and FCC agreements so far. The fact that NextWave accepted quite a low price from the FCC suggests to me that there is some doubt that the Supreme Court would confirm NextWave's position. Or, perhaps simply that a bird in the hand is worth two in the bush. On a 'two in the bush' basis, the value NextWave got is $12bn of the $16bn. That implies a very strong case.
If they get the money and run, they'll be able to do something useful with it instead of waiting for a long time to get a Supreme Court decision which could possibly be the wrong one for them.
Your QUALCOMM analogy was a bit incorrect. A more accurate analogy would be the government leasing land to a company for 20 years. The company builds a building, sets up shop and starts selling. Then, they go bust. The bankruptcy laws allow continued operation with creditors getting reduced payments. The land owner [the government in this instance] would be such a creditor. Similarly, if the government simultaneously leased spectrum to them to transmit from that land. Creditors can't just take back the property they sold or leased to a company unless the contracts and courts agree.
As I say, I haven't read the fine print and analogies can only go so far.
I can understand that there is a case and there obviously is, given the FCC, court, new bidder and NextWave positions. In fact, I am certain that there is a very good case, based on their positions. Only a few amazing people such as you seem to think there is no case.
Mqurice
PS: I can sympathize with Hollings because it is really annoying to be handed a late decision by people who have mucked stuff up. The BP Supply Department a couple of times phoned me and said "Maurice, there is a ship full of petrol [or diesel] being loaded at Geelong [or somewhere] and it's not quite on specification. We are out of stock in 6 days and the country will stop moving. Should we accept the off-specification product? We need an answer in 10 minutes because the ship has to sail if we don't want it".
I patiently explained to them [after accepting delivery] that their supply contracts obviously had a gap in them. There was no huge financial consequence to the useless refinery such as sufficient financial inducement to ensure products were made correctly. Senator Hollings must feel similar to how I did. |
