NextWave Settlement Faces Hurdles
Federal and industry negotiators say a $5-billion settlement with bankrupt NextWave Telecom Inc. over disputed wireless licenses may be in jeopardy if a deal is not reached before Congress takes a break later this month.
The warning comes only days after negotiators hinted that an agreement was at hand over the disposition of a valuable swath of airwaves now controlled by Hawthorne, N.Y.-based NextWave.
The talks stem from NextWave’s failure to pay the government $4.7-billion for wireless phone licenses auctioned by the Federal Communications Commission in 1996. The agency subsequently took back NextWave licenses and re-auctioned them last winter to Verizon Communications Inc., VoiceStream Wireless Corp. and 19 other carriers. But that sale was later invalidated by a federal court.
Last Friday, FCC Chairman Michael K. Powell, Verizon Communications President Ivan Seidenberg and other officials reached agreement in principle to break the impasse by awarding NextWave about $5 billion in exchange for returning its wireless licenses to the FCC.
The government, in turn, would give the disputed airwaves to Verizon and other successful bidders and keep about $11 billion of the $16.9 billion those companies offered when the FCC re-auctioned NextWave’s licenses last winter.
But the parties remain at odds after a Sunday meeting in which NextWave, industry negotiators and officials of the FCC and the Office of Management and Budget were to have ironed out the final details of the Friday accord.
The remaining sticking points include the timing of payments and license swaps as well as securing congressional approval of a measure that would insulate the transfer of wireless licenses from further legal challenge.
Still, negotiators held out hope that a final agreement could be reached soon.
Verizon and some other carriers involved in the NextWave talks have sought congressional endorsement of a measure that would protect any NextWave license transfers from further legal challenge. But that prospect may dim as early as next week because experts say lawmakers are unlikely to have enough time after then to act before the current session ends later this month.
At least two other carriers involved in the 1996 wireless auction have defaulted on their payments and are watching the NextWave case closely as they assess their own strategies.
“I think people are still optimistic but it is getting down to the wire,” said one industry official with knowledge of the talks.
“There was some new ground broken; but the I’s have to be dotted and Ts crossed,” added Rudy Baca, a wireless phone analyst with the Precursor Group, a Washington research firm.
Meanwhile, Sen. John McCain (R-Ariz.), the ranking minority member of the Senate Commerce Committee, has told the Senate leadership he is against any financial settlement for NextWave.
In a letter sent to Senate Majority Leader Tom Daschle (D-S.D.) and Minority Leader Trent Lott (R-Miss.) last week, McCain said NextWave is trying to win payment for its disputed licenses by “exploiting legal technicalities.”
McCain added that, if successful in getting a financial settlement, NextWave will deprive taxpayers of “revenue desperately needed to address the recent terrorist attacks upon this country.”
