Bloomberg -- NextWave Draws Support at U.S. Supreme Court Hearing.
bloomberg.com
NextWave Draws Support at U.S. Supreme Court Hearing (Update1)
By Greg Stohr
Washington, Oct. 8 (Bloomberg) -- NextWave Telecom Inc. got support from seven of nine
justices as the company's lawyer urged the U.S. Supreme Court to let it keep disputed
airwaves worth as much as $12 billion.
The justices are reviewing efforts by the Federal Communications Commission to reclaim the
spectrum from NextWave, which won 63 licenses in a 1996 auction and then missed the
payment deadlines and filed for bankruptcy protection.
A victory for NextWave would clear the largest legal obstacle it faces, freeing the company
to finish building its network or sell the licenses.
Justices Antonin Scalia and David H. Souter criticized the government's argument that the
FCC's interest in ensuring efficient use of the licenses can trump the normal rules of
bankruptcy procedure. Souter said the agency sought to reclaim the airwaves only when the
fluctuating market value of the spectrum was higher than what NextWave bid for it.
``It seems that at each point where the FCC made a decision, it made an economic decision
rather than a regulatory decision,'' Souter said.
NextWave shares, which have lost about 90 percent of their value in the past year, rose 65
cents, or 42 percent, to $2.20 at 11:22 a.m. in over-the-counter trading.
Scalia pointed to a provision in the federal bankruptcy code that says government agencies
can't revoke a license ``solely because'' the bankrupt company ``has not paid a debt that is
dischargeable in the case.''
``I consider this a classic case for what this provision of the bankruptcy code was directed
to,'' Scalia said.
Government Disadvantage
Only Justice Stephen G. Breyer suggested he might vote in favor of the Justice Department
and FCC. He said he was worried that a ruling for NextWave might put the FCC at a
disadvantage compared with other creditors.
An FCC win would leave ownership of the airwaves in doubt because NextWave could
return to a lower court with other arguments.
Chief Justice William H. Rehnquist and Justices Sandra Day O'Connor, Ruth Bader Ginsburg,
John Paul Stevens and Anthony M. Kennedy also aimed skeptical questions at Justice
Department lawyer Paul Clement. Justice Clarence Thomas, as is his usual practice, asked no
questions.
NextWave's wireless licenses, all but a handful of which are in dispute, give it access to the
10 largest U.S. markets, including New York, Los Angeles and Washington, and 172 million
potential customers.
The case is FCC v. NextWave Personal Communications, 01-653.
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