Subject: [NEXTEL-1] Nextwave Deploys Handsize Wireless Modem In Henderson, NV.

From: [email-masked]
Date: Tue, 05 Aug 2003 03:56:20 -0400

[NextWave's Michael J. Rossmiller, seated, with Alan Cameron, left, and James L. Hamilton, at the operations center in Nevada.]

NextWave's Michael J. Rossmiller, seated, with Alan Cameron, left, and James L.
Hamilton, at the operations center in Nevada. (Anybody recognize the equipment
above?)

August 4, 2003

NextWave: Airwave Rich but Cash Poor
By JENNIFER 8. LEE

ENDERSON, Nev. — For the last seven years, some of the most valuable assets in
technology — billions of dollars of
communication airwaves — have been sitting untapped, tangled up in bankruptcy and
other federal courts. If commercial
airwaves were New York City real estate, it would be as if Midtown Manhattan were
a big empty lot.

Now NextWave Telecom, proclaimed by a Supreme Court decision in January to be the
rightful owner of licenses to use that airwave spectrum, has declared plans to
build out a wireless network for data transmission. The news has been greeted with
skepticism by an industry that would prefer to have NextWave sell its licenses to
carriers that need more radio spectrum to improve their cellphone services.

The telecommunications landscape has changed significantly since 1996, when
NextWave was an aggressive start-up in the rush to create cheap nationwide
cellphone rates. But after it failed to go public, it filed for bankruptcy
protection and became embroiled in a battle with the Federal Communications
Commission over its failure to make payments, beyond a $500 million down payment,
on $4.7 billion in spectrum licenses it bought at auction.

For the last six years, it has been on the sidelines as wireless phone services
have swept the country. Now the company, spectrum rich and cash poor, is trying to
emerge from bankruptcy. And its founder and chief executive, Allen B. Salmasi, a
former top executive at Qualcomm, is still offering a grand vision of NextWave's
role in the wireless future.
The company argues that the same spectrum that carries phone calls could be better
used to send digital data through the air. So NextWave is planning to build a
high-speed, ubiquitous Internet access network. It hopes to sell that service to
telecommunications carriers and other companies rather than directly to consumers.

The company says it is experimenting with technology that has about 20 to 30 times
the range of Wi-Fi, the popular short-range wireless Internet technology known as
802.11 that a number of wireless companies are supporting. NextWave says that its
technology's one-mile range would be far superior to the loose and spotty coverage
offered by Wi-Fi areas, or "hot spots," that have arisen. In terms of the
effectiveness of the range, the difference could be seen as similar to that
between a cellphone and a cordless phone.

The financial community has been cool to this plan because NextWave has long been
considered the company better known for its Washington lobbying and litigation
prowess than for delivering any innovative product. Certainly, obtaining approval
from creditors to build a nationwide commercial network seems a long shot.

"I have not met anyone who has taken it seriously in the sense that they think it
is likely to happen," said Blair Levin, an analyst for Legg Mason who was chief of
staff at the F.C.C. at the time of the 1996 NextWave auction. A recent report from
Bear Stearns says of the company's new plan: "While the venture may be a reality,
we believe there may be posturing to show the F.C.C. that it is serious about
building out its licenses."

Still, during the last year, a group of NextWave engineers based here has
assembled a skeleton data network in 95 markets across the country to fulfill
F.C.C. requirements for license holders. The company will start testing its
high-speed wireless data technology at a coffee shop in a strip mall near its
Henderson headquarters. A handsized wireless modem will pulse as it receives
signals from an antenna on NextWave's roof less than a mile away.

Many of NextWave's managers have been occupied by financial ambitions and
troubles, but they note that Mr. Salmasi, the chief executive, is an engineer, not
a financier, by training. NextWave engineers still toss around phrases like
"disruptive technology" with an evangelical air that is a throwback to the dot-com
boom.

Despite NextWave's insistence that it can return as a viable business, the
conventional wisdom is that its best option is to liquidate by selling its
licenses to the wireless carriers, like Cingular, Verizon and AT&T Wireless, that
need more spectrum.  NextWave holds as much as one-sixth of an important type of
wireless spectrum in major cities nationwide, including some of the largest cities
with the most congested airwaves, like New York, Chicago, Los Angeles and San
Francisco.

Conservative estimates put the value of the spectrum rights at about $4 billion.
Generous estimates put it at twice that amount.
Most analysts think the value is high enough for NextWave to pay its debts and for
investors to walk off with some profit.
Even among employees, there has been discussion about the benefits of cashing out
versus building out. The financial managers are open to the possibility of selling
the licenses. "That is one of the branches in the decision tree that we have to
consider," said George Alex, NextWave's vice president for finance. "It's a daily
thought."

Igor Volshteyn, an analyst for Tejas Securities, which focuses on distressed
companies, said that selling the licenses "at a fire sale price today is being a
little shortsighted." But he noted that "absent an attractive bid, the company
will need to have an alternate plan to bring value to shareholders, such as the
build-out of an all-data network with unique service offerings not available from
today's nationwide carriers."

Even if NextWave carries out its plan, it will need to generate cash to settle its
debt with the F.C.C., one of its largest creditors.  Some significant financial
questions are unanswered — like whether the company owes interest on that debt for
the years when the licenses were locked in litigation. F.C.C. officials, citing
the sensitivity of the talks, declined to comment.
The most likely outcome, according to analysts, is for the company to sell some
licenses, using the money to build its network and buy other spectrum. NextWave is
already in the final stages of selling about 20 percent of its spectrum holdings
to Cingular for $1.4 billion. In June, it formed a partnership with Clarity
Partners, an investment group that focuses on spectrum, to evaluate acquisition
opportunities.

Building a seamless, wireless Internet-access network is a promising but risky
field. Metricom's Ricochet Network, a high-speed wireless Internet access company,
had a small but passionate following, charging subscribers $80 a month for
unlimited access.  The company filed for bankruptcy protection in 1998, and was
resurrected in San Diego and Denver under a different owner earlier this year,
with a lower subscription fee.

The growing popularity of decentralized Wi-Fi hot spots may well siphon demand for
a broad coverage network. But NextWave contends that Wi-Fi complements its plans.
Indeed, the Henderson coffee shop will use NextWave's technology to receive an
Internet signal to a Wi-Fi access point in the shop.

Other wireless companies are also showing more interest in the broadband data
market. Verizon now offers its own wireless Internet service, called Express
Network, though the service remains costly at $80 a month for unlimited access.
NextWave says it will be able to offer its service at prices far below the costs
of high-speed Internet access through cable modem or telephone digital subscriber
lines. Unlike other wireless Internet purveyors, NextWave would not sell services
directly to consumers. Instead, it plans to sell services to phone companies and
other carriers, which would then make the service available to their subscribers.
NextWave's executives say they can offer the service cheaply enough so that
carriers could still have a "comfortable" margin selling it to consumers for $30 a
month. The company hopes to begin the service as soon as 18 months after its
reorganization plan is approved.

NextWave hopes its partners will be the ones to fight the established phone and
cable companies that currently control the high-speed Internet access market.

http://www.nytimes.com/2003/08/04/technology/04NEXT.html
--
    "NEXTEL-1 IT'S NOT JUST NEXTEL"
  Note The New address
Subscribe to Nextel-1: http://www.groups.yahoo.com/subscribe/NEXTEL-1

  "NEXTEL2 FOR iDEN SOFTWARE DEVELOPERS"
Subscribe to Nextel2: http://www.groups.yahoo.com/subscribe/NEXTEL2

  "WIRELESS FORUM HOMELAND SECURITY GROUP"
     The Complete Resource for Wireless Homeland Security.
Subscribe to WFHSG:  http://www.groups.yahoo.com/subscribe/WFHSG