WSJ -- U.S. Plans to Sell Big Chunk Of Wireless Spectrum in 2005.
June 17, 2004
U.S. Plans to Sell Big Chunk Of Wireless Spectrum in 2005
By a WALL STREET JOURNAL Staff Reporter
WASHINGTON -- The federal government is planning a January auction of wireless spectrum that is expected to yield billions of dollars from major mobile-phone companies eager to offer new and improved services.
The Federal Communications Commission is expected to announce, as soon as this week, that it will make available more than 2,400 megahertz of spectrum, including the chunk it recently retrieved from NextWave Telecom Inc. In all, about 234 licenses -- of which 155 used to belong to NextWave -- will be sold to the highest bidder, according to people familiar with FCC plans.
FCC and industry officials liken spectrum demand to the 1800's "Gold Rush" because there are so many more prospectors than availability. In the past decade, the demand for spectrum -- the limited number of electromagnetic frequencies that circle the earth and are used to transmit sound, data and television -- has exploded.
Wireless companies big and small are clamoring for more bandwidth to meet increasing customer demand for gadgets such as handheld devices that search the Internet and cellular phones that beam pictures. Such new services soak up more space in the spectrum than traditional cellphone calls.
Next year's auction is likely to attract many of the nation's biggest wireless companies, including Nextel Communications Inc., Sprint Corp., and T-Mobile USA Inc.
Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Inc., and Cingular Wireless, owned by BellSouth Corp. and SBC Communications Inc., also likely would seek the lucrative airwaves, along with others, industry analysts said.
"Those NextWave licenses have been in purgatory for nine years, and this chunk is particularly valuable for almost any application," said Scott Cleland, chief executive of Precursor, a Washington investment-research firm. Among the licenses coming available are those for Los Angeles, San Diego, Seattle, Denver and St. Louis, among others.
The airwaves in question center on the 1.9-gigahertz range of spectrum, a highly attractive area that allows for more efficient use of the bandwidth than conventional cellular service. That's the same range from which Nextel is seeking 10 megahertz as part of a deal intended to solve interference problems between the company's phones and public-safety communications equipment. The FCC, which manages spectrum allocation for commercial uses, hasn't made a decision on that, an FCC spokesman said.
In April, the FCC resolved an eight-year fight with NextWave that allowed it to get back most of the unused spectrum the company had won in an auction in 1996. The company had agreed to pay $4.7 billion for the licenses, but it ran into financing problems almost immediately. It filed for bankruptcy protection and fought the FCC all the way to the Supreme Court when the commission tried to repossess the much-sought licenses.
As part of the recent settlement, NextWave, based in Hawthorne, N.Y., held on to some of the licenses, which it plans to sell on its own to raise funds in its effort to emerge from bankruptcy proceedings.
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