NextWave, Lucent Plan to Build Nationwide Cellular Network
NextWave Telecom Inc. announced Monday a $100-million contract with Lucent Technologies to begin construction of a new nationwide cellular network, putting to use one of the largest swathes of airwaves remaining in the United States.
Though the contract amount is small compared with the billions of dollars spent on other national networks, NextWave officials said it shows the underdog company’s determination to compete with the nation’s wireless giants.
Other wireless companies, eager to use the scarce radio spectrum themselves, had hoped bankrupt NextWave would accept a government payment in exchange for returning all the wireless licenses it won back last month in a court ruling.
The companies and the Federal Communications Commission had said NextWave’s plan to keep the licenses would disrupt plans by existing carriers to launch new data services and relieve congestion on their networks.
But Michael Wack, assistant counsel for Hawthorne, N.Y.-based NextWave, said the deal with Lucent is the first step in a fast-track plan to create a cutting-edge wireless data network within a year.
Under the deal, Lucent will build a voice and data wireless network in Detroit and Madison, Wis. The equipment company also will deploy the initial stages of a data-only network in 93 other markets, NextWave said.
The company’s network will use the most advanced version of code-division multiple-access, a technology developed by San Diego-based Qualcomm Inc. NextWave said its network will carry wireless data faster than any mobile network in operation today.
Lucent, which has suffered as a string of customers defaulted on equipment loans, will be paid in cash by NextWave using funding recently approved by Bankruptcy Court.
“The money for this contract was explicitly put together for this purpose . . . it’s a bridge to much larger financing that will be outlined in our reorganization plan, which will be filed soon,” Wack said. “We will also deploy lots more equipment when the plan of reorganization is confirmed.”
The project is ambitious. Nationwide networks typically cost billions of dollars and five years to build. And most major U.S. cities are already crowded with four to six aggressive mobile phone carriers.
Given those challenges, some believe the Lucent contract is merely a clever negotiating ploy aimed at getting more money from the FCC by feigning reluctance to settle.
“NextWave is going to move forward and try to present itself as a viable entity,” said Rudy Baca, global wireless strategist with the Precursor Group. “It’s a very smart negotiating ploy. But I think that they will finally agree to get a divorce from this marriage from hell with the FCC.”
But Wack dismissed such speculation, saying the company has a viable business plan that is different from its competitors. Its key strategy is to build a network that is focused on providing the high-speed cellular data network that customers are clamoring for and that the industry recognizes as the future of the business.
NextWave also intends to sell extra space on its network to capacity-starved rivals and to upstarts such as Virgin, the British company that has begun using its brand to sell mobile phone service.
The company’s wireless licenses have been the subject of a bitter multiyear legal fight between NextWave and the FCC that started after NextWave bid $4.74 billion for its airwaves and then defaulted on the payments.
Once NextWave was in Bankruptcy Court, the FCC reclaimed the licenses and resold them earlier this year for $17 billion to more than 20 companies, including Verizon Wireless, and small companies with backing from the likes of Cingular Wireless and AT&T; Wireless Group.
The record-setting auction proceeds were promptly built into the federal budget. But last month, an appeals court negated the FCC auction, saying the FCC broke bankruptcy laws when it repossessed the disputed licenses.
