Subject: [NEXTEL-1] NextWave must shed most of its spectrum under FCC settlement

From: [email-masked]
Date: Tue, 20 Apr 2004 18:19:17 -0400

NextWave must shed most of its spectrum under FCC settlement

By Heather Forsgren Weaver
April 20 16:42:00, 2004

WASHINGTON—The Federal Communications Commission and bankrupt NextWave
Telecom Inc. today signed an agreement that would require NextWave to
continue to divest the majority of its spectrum holdings following a
recently completed sale of licenses to Cingular Wireless L.L.C.

“After eight long years, we can finally end the litigation and begin the
innovation. This landmark agreement takes valuable spectrum resources
out of the courts and will put it in the hands of consumers who can
finally use it,” said FCC Chairman Michael Powel.  “Making additional
next-generation wireless services available is good for the economy and
good for broadband deployment. Ending one of the most hotly contended
legal battles with a commercial solution that results in over $4 billion
in value to taxpayers makes this settlement a success for the American
people.”

The details of the agreement were not released but sources said that as
part of the agreement, the FCC would receive more than $4 billion in
both cash and licenses. In addition, NextWave has agreed to sell more
spectrum—that will be at least 90 percent of its holdings including the
Cingular sale.

Also, in the event that NextWave sells or leases any of the retained
licenses before Feb. 14, 2007, the FCC will get a portion of the
proceeds above certain target levels, which represent an increase in
value.

A global settlement has long been anticipated following NextWave’s
decision to sell licenses for 34 markets to Cingular for $1.4 billion.
NextWave and Cingular announced the proposed sale last summer.
Bankruptcy Judge Adlai S. Hardin Jr. approved the sale last fall and
recently the FCC approved the license transfer.

Cingular paid the FCC $714 million of $4.7 billion NextWave still owes
the government following a five-year litigation saga. The licenses gave
Cingular spectrum in major markets, including Los Angeles, Chicago, San
Francisco, Dallas, Houston, Washington, D.C., Atlanta, Boston, San Diego
and Baltimore. The licenses—some of which are slices of the 30-megahertz
licenses won by NextWave in 1997—cover 83 million potential customers.

NextWave still holds the rights to spectrum in 81 markets.

The Supreme Court said on Jan. 27, 2003, that NextWave could keep its
licenses.
In an 8-1 ruling, the Supreme Court agreed with the U.S. Court of
Appeals for the District of Columbia Circuit that the FCC could not take
back NextWave’s licenses because they were protected by the Bankruptcy
Code.

Congress has at various times tried to pass legislation to fix the
conflict between the Communications Act and the Bankruptcy Code but has
never succeeded.

Powell said the FCC learned its lesson from the NextWave/C-block debacle
and will no longer auction off licenses using installment payments. He
said this was unfortunate because the agency should create mechanisms to
encourage small-business and minority spectrum use.

The Supreme Court decision ended nearly five years of litigation that
began when NextWave filed for bankruptcy on June 8, 1998.

After a bankruptcy judge lowered the amount that NextWave owed to the
government, the government won favorable rulings by the U.S. Court of
Appeals for the 2nd Circuit, but that appeals court said it could not
rule on whether the FCC could revoke NextWave’s licenses. The FCC
claimed in January 2000 that the licenses cancelled in October 1998 when
NextWave failed to make its installment payment. NextWave said the
licenses were protected by the Bankruptcy Code.

http://rcrnews.com/cgi-bin/news.pl?newsId=17782
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