( BW)(NY-NEXTWAVE) NextWave Supports President Clinton's Internet Subsidy Plan to Help Underserved Communities Get Online; NextWave Pledges $1 Billion to Provide Wireless Internet Access
Business Editors
HAWTHORNE, N.Y.--(BUSINESS WIRE)--Jan. 27, 2000--Allen Salmasi, Chairman and CEO of NextWave Telecom Inc., pledged his support of President Clinton's plan to seek federal subsidies to help underserved communities connect to the Internet. "President Clinton's initiative is a terrific program and will provide a key incentive for companies in the telecommunications industry to begin developing the underserved markets," stated Salmasi. "NextWave stands ready and willing to provide $1 billion of free broadband wireless Internet access to the underprivileged markets." On January 11, 2000, NextWave offered to the FCC's Chairman Bill Kennard to provide up to $1 billion of free wireless broadband Internet access and wireless telephony services to inner-city schools, public libraries and underserved communities across the country during the term of its PCS licenses.
NextWave's proposal to benefit America's underserved was in addition to an immediate lump-sum payment of its entire debt obligation to the government of $4.3 billion for use of its licenses, the single largest payment ever to the United States government. Under the FCC rules, NextWave had no obligation to pay any of the principal amounts of the C-block notes until the first quarter of 2003. Surprisingly, the FCC spurned this unprecedented proposal to help bridge the digital divide, an offer which would not cost American taxpayers one penny in new taxes or fees.
"Private sector subsidies should be a welcomed addition by the government to expand access to the Internet and other key services," added Salmasi. "It is the cruelest form of regulatory harassment for the FCC to be investing so much time and energy in seeking to deprive NextWave of its licenses and thereby prevent NextWave from providing wireless services to millions of underserved Americans. However, NextWave will not abandon its efforts to fulfill its vision of bringing open access to the Internet and 'last mile' voice services to all Americans."
After having paid the FCC over $500 million and having spent nearly $100 million for the build-out of its network, NextWave sought protection under the bankruptcy code to reorganize its business. Consistent with the purposes of the bankruptcy laws, which are designed to facilitate and support the rehabilitation of businesses, NextWave was able to prepare and finance a plan of reorganization that paid the FCC and its creditors in full and would put its spectrum into immediate use for the public benefit.
NextWave's plan of reorganization is supported by $5 billion of new capital, $4.3 billion of which would be paid to the government, and additional vendor financing commitments that support the immediate build-out of the network. Confirmation of this plan was set for the end of January, enabling the immediate deployment of a new wireless network. Contrary to the implications of the FCC, NextWave's reorganization and business plan complies fully with the Commissions' rules and timetable for build out of the spectrum.
NextWave formally advised the FCC that it seeks no waiver of the Commission's five-year build-out requirements. Supplemented by written assurances from its vendors, NextWave has confirmed to the Commission that it is and will continue to be in full compliance of the build-out requirements. It is only as a result of the FCC's election to continue a course of protracted litigation that the public is being denied of additional competition that NextWave can bring about in the wireless arena. Against this backdrop, the FCC's rejection of NextWave's offer to immediately pay the FCC the full amount of its bid price and the statement by Commission that "Now it is time to act swiftly to auction this spectrum and put it to productive use for U.S. consumers," rings hollow.
The FCC's efforts to block the commercialization of the NextWave's licenses and its election to pursue unlawful actions to punish NextWave for exercising statutorily granted rights are at odds with federal laws and the Commission's own statements regarding the need for prompt utilization of NextWave's spectrum. In addition to thwarting the policy objectives mandated by Congress, the FCC's action callously harms other creditors and the investors, including numerous private and state pension funds, in a manner that the bankruptcy laws were specifically designed to prevent. The Company has over 3000 creditors and shareholders, the majority of whom are small businesses and individuals, and it will vigorously defend their assets against unreasonable actions by others, including the FCC. We are confident the courts will respond appropriately to the FCC's unlawful action and that NextWave's rights will be vindicated.
On Monday, January 24, 2000, the U.S. Court of Appeals for the Second Circuit issued an order denying a motion filed on the same day by the FCC that sought to stay further proceedings concerning NextWave Telecom Inc.'s bankruptcy reorganization that are being conducted before U.S. Bankruptcy Judge Adlai S. Hardin.
On January 14, 2000, U.S. Bankruptcy Judge Adlai S. Hardin, Jr., the presiding judge in NextWave Telecom's pending reorganization proceeding, ordered the FCC to appear in federal court and show cause why the agency's action purporting to cancel the Company's licenses and schedule them for re-auction is not null and void as a matter of law and without force or effect. Judge Hardin's action came in response to a request filed by NextWave, which also filed a memorandum of law demonstrating that the FCC's action is contrary to explicit provisions of the federal Bankruptcy Code and governing judicial precedent. A hearing on that question was held last Friday, January 21st, in Judge Hardin's courtroom in White Plains, N.Y., and Judge Hardin is expected to issue a decision shortly.
NextWave Telecom Inc. (www.nextwavetel.com) was formed in 1995 to become a leading provider of wireless telecommunications services. The Company intends to build and operate a nationwide Personal Communications Services ("PCS") network to provide portable high-speed Internet access and voice services to consumers and businesses. NextWave's unique packet data wireless network will provide Americans with untethered access to Internet content and applications via mobile phones, handheld computing and PDA devices, notebook computers, and next generation Internet appliances.
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CONTACT: NextWave Telecom Inc:
Michael Wack, 202/661-2083 (mwack@nextwavetel.com)
Michael Regan, 202/661-2084 (mregan@nextwavetel.com)
or
MWW Group:
Matthew Rose, 201/964-2376 (mrose@mww.com)
William P. Murray, 201/507-9500 (wmurray@mww.com)
KEYWORD: NEW YORK
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS INTERNET GOVERNMENT
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