NextWave, FCC Close to Settlement
Federal regulators have offered to pay NextWave Telecom Inc. about $5 billion to end the company’s claim to wireless licenses that the government wants to transfer to other carriers, according to industry sources.
A Federal Communications Commission aide on Monday would not confirm the deal.
But three industry sources close to the talks said a deal had been reached Monday that would require NextWave to drop any claim to wireless licenses it acquired in 1996 in exchange for a lump-sum payment of $5 billion that would be taxable.
The dispute dates to 1996 when Hawthorne, N.Y.-based NextWave bid $4.74 billion for 63 wireless licenses at auction. But the company only made a down payment and later filed for bankruptcy protection.
Outraged FCC officials immediately moved to retake NextWave’s licenses and resold them to other carriers. NextWave then sued the FCC in federal court to get back the wireless licenses.
Under the proposed settlement, the licenses could be reissued to Verizon Communications Inc. and other U.S. carriers. FCC commissioners may take up the agreement as early as today, sources said.
Officials at AT&T; Wireless and Verizon declined to comment, and NextWave did not return calls for comment.
But an industry source said Verizon probably would drop its previous objections to an FCC settlement with NextWave and support the current deal.
After the FCC confiscated the licenses from NextWave it sold them as part of a $16.8-billion auction in January to Verizon, Voicestream and 19 other carriers--a record amount for a federal airwaves auction.
If the NextWave deal is approved, the federal treasury would retain more than $10 billion of the amount raised in January. In June, NextWave won a reprieve when a federal appeals court in Washington ordered the licenses returned to the company.
The court ruled that the federal bankruptcy code bars the FCC from taking government-issued licenses from a debtor seeking to reorganize under federal bankruptcy laws. NextWave then planned to emerge from bankruptcy and to pay the FCC for the licenses.
The ongoing dispute over NextWave’s licenses also threatened to significantly slow expansion of cellular phone services in the booming wireless industry, which have been signing up more than 50,000 new customers a day.
“The NextWave problem has kept a huge block of wireless spectrum on ice,” said Scott Blake Harris, a Washington communications lawyer who headed the FCC’s international bureau. This deal “will allow the existing wireless providers to obtain more spectrum and provide additional services, sooner rather than later.”
The settlement probably will provide a further boost to wireless phone stocks, which have risen dramatically since the terrorist attacks heightened public awareness of cell phones.
NextWave’s shares closed Monday at $9.70, down 20 cents, in over-the-counter trading.
