Verizon wants out of NextWave deal
news.com.com
By Reuters
March 8, 2002, 4:40 PM PT
Verizon Wireless told federal regulators this week that it wants to get off the hook on its
obligations to acquire bankrupt NextWave Telecom's licenses, which have been caught
in a long legal tussle, according to a letter obtained Friday.
The biggest U.S. mobile telephone carrier bid about $8.5 billion for 67 licenses 14 months ago.
However, it has not been able to acquire the licenses because an appeals court ruled last year
that they belong to NextWave, which is in bankruptcy protection.
The Federal Communications Commission tried to take the licenses away from NextWave
when the company failed to pay for them on time, but the court intervened. The U.S. Supreme
Court has agreed to hear the dispute, which could prolong the battle over the airwaves for at
least a year, if not longer.
As a result, Verizon Wireless, a joint venture of Verizon Communications and Vodafone Group,
said it wants to end its participation in the government's 2001 resale of the disputed licenses,
potentially releasing the $8.5 billion obligation hanging over the company.
"Because the FCC failed to deliver the licenses, Verizon Wireless has been unable to derive
any value from them throughout 2001 and has had to incur costs in making alternative
arrangements to satisfy capacity demands," Mark Tuller, a Verizon Wireless lawyer, said in a
March 5 letter.
"To the extent we have the right to void the auction contract as to the NextWave licenses, we
elect to void the contract," the letter to the FCC said. "The commission therefore should
promptly refund Verizon Wireless' entire deposit, without retaining 3 percent or any other
portion of the bid prices."
The FCC declined to comment.
Analysts have said that the money freed up could be used to acquire airwaves elsewhere to
expand and improve services.
Verizon Wireless has tried different ways to either acquire the licenses or recover the
downpayment of $1.71 billion it had to deposit with the FCC for the licenses. The agency has
declined to act on the request to return the money, and a court refused last week to compel the
agency to return the funds.
The carrier, along with others that participated in the 2001 sale--Verizon and partners of AT&T
Wireless Services and Cingular Wireless, among others--have argued that they are losing
millions of dollars each week in interest without their deposits returned.
Last year, the FCC tried to broker a settlement in which NextWave would receive about $5.85
billion to give up its claim to the airwaves, while the government would receive $10 billion. The
funds would come from the $15.85 billion bid by the wireless carriers for the disputed airwaves
in 2001.
However, that settlement fell apart when Congress failed to adopt legislation last year to
authorize the deal.
Verizon said that if the FCC disagrees with the company's assertion that it could pull out of the
auction, it will ask a court to resolve the matter. |
