FCC grants NextWave reprieve on U.S. debt
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Penni Crabtree
STAFF WRITER | Dispatches from Bloomberg News and the Associated Press were used in this report.
25-Feb-1998 Wednesday
NextWave Telecom Inc. has won a reprieve in dealing with its $4.2 billion
debt to the federal government.
The Federal Communications Commission announced yesterday that the San
Diego-based firm and others who bid billions for wireless phone licenses
will have more time to decide how to pay for them.
Companies will have until roughly June to choose a course of relief, rather
than Thursday, which was the latest deadline by which the companies had to
act.
The extended deadline also gives the FCC time to consider making changes to
a restructuring order it issued in September, outlining four methods by
which the companies could seek relief. Many companies, including NextWave,
have asked the FCC for additional concessions.
"We still don't know what options the FCC will offer, but at least we don't
have to make a decision for a while," said Kevin Christiano, a spokesman
for NextWave, which won 95 licenses with its $4.2 billion bid in the
auction. "We believe that mild adjustments are still needed to improve upon
the options the FCC offered in September."
The problem arose two years ago when winners in an airwaves auction
reserved for small businesses pledged $10.2 billion for licenses for the
next generation of wireless communications, known as PCS. After the
auction, many of the companies said they couldn't pay for the new mobile
phone licenses and asked the FCC for relief.
In September the FCC told companies they could choose one of four pay-back
options:
<Picture>Continue making installment payments on licenses won at auction.
<Picture>Return some or a portion of their licenses to be reauctioned. Their debt
would be reduced proportionately.
<Picture>Use 70 percent of their initial down payments to the government to buy
as many licenses as they can afford. Licenses they can't pay for would be
returned to be reauctioned.
<Picture>Give back, without penalty, licenses they can't pay for to be
reauctioned and surrender their deposits.
At the companies' request, the FCC is now considering letting them pick
market by market which licenses they want to keep and reducing their debt
by a proportional amount. The FCC is also looking at whether license
holders that hand back licenses should have to forfeit a 10 percent down
payment.
NextWave, which has 100 employees, 20 of them at its San Diego
headquarters, said additional concessions to the relief plan would allow
the company to forge partnerships and find financing to build PCS networks,
including one in San Diego.
"We have 25 different companies lined up to buy a total of 35 billion
minutes of air time -- that is our backlog," said Christiano. "We're
anxious to get a reasonable restructuring order so we can build those
networks." |
