Some analysts' comments
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Meanwhile, NextWave has moved ahead with plans to build its network, which it would then lease or sell to
the big carriers.
Now, those plans could be put on hold for at least two years, says Legg Mason analyst Blair Levin. He says there's a good chance the high court will overturn the appeals court and send the case back to a judge for further review. And as the case drags on, the FCC will likely succumb to pressure from Verizon and other carriers to return their multibillion dollar auction deposits, Levin says.
It's unclear whether the big carriers would ever have to pay their original bids, since the sour economy has roughly halved the value of the airwaves, experts say.
Levin predicts the courts or FCC will ultimately order a new auction. ''We'd like more spectrum, but we'd like to pay less for it,'' says Verizon's Jim Gerace.
Other analysts say all the parties could still work out a new settlement that lets NextWave build its network. That deal would not require congressional approval.
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The Bigger Picture
"For NextWave, it's all or nothing," Yankee Group program manager Roger Entner told Wireless NewsFactor. "They will either walk away rich or will have wasted the last six years on this issue."
But the larger issue, Entner said, will be either a new definition of bankruptcy law or a new definition of the FCC as guardian of U.S. wireless spectrum.
"Bankruptcy law states that the federal government is just another unsecured creditor with no special rights," he said. "The FCC has to learn a lesson and restructure the auction process so that a carrier does not own a license until it has paid in full for that license."
Entner believes the carriers will get back their deposit money before the Supreme Court issues a ruling in the case, which is not expected until early 2003. "The government can't hold billions of dollars in escrow for more than a year," he said.
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"It means that valuable spectrum is going to be locked up for another year," said ABN AMRO Inc. analyst
Kevin Roe.
"The FCC and Nextwave can go to litigation heaven. We want our money back," said Ivan Seidenberg,
president and co-CEO of Verizon.
"It may be more difficult now that the Supreme Court decided to hear the case, but I think it's probably in
everyone's best interest" to try to reach a settlement, said Kaufman Bros. analyst Douglas Makin. |
