Verizon Abandons Bid for Airwaves
In a second setback to government and industry efforts to put a major swath of wireless spectrum to use, Verizon Wireless said Thursday that it is abandoning its yearlong bid to secure a portion of $16 billion worth of airwaves owned by bankrupt NextWave Telecom Inc.
The decision by the nation’s largest wireless carrier appears to end any hope of reviving the controversial airwave settlement that awarded NextWave about $6 billion in exchange for the transfer of its 197 wireless licenses to Verizon, VoiceStream Wireless Corp. and several other carriers.
Analysts speculate that Verizon and other like-minded carriers will try to cobble together the additional capacity from other carriers or by bidding in an upcoming auction of the 700-megahertz spectrum that will be held by the Federal Communications Commission later this year.
In any event, Verizon said its patience has run out on NextWave. “We are solely focused on getting our deposit back,” Verizon spokesman Jeffrey Nelson said of the $1.7 billion it gave the U.S. Treasury last winter as a deposit on its wireless bids. “Until we get it back, we are not interested in discussing any options with NextWave.”
The nation’s wireless carriers have been counting on amassing more wireless spectrum, which is crucial to the delivery of advanced services such as getting driving directions, the latest stock prices and other information delivered instantly over mobile phones.
Verizon, Sprint, AT&T; Wireless and others are in the midst of spending billions of dollars to expand their networks to provide such services.
Hawthorne, N.Y.-based NextWave originally bid $4.7 billion for its wireless phone licenses at a 1996 Federal Communications Commission auction. But the company failed to pay for them and entered bankruptcy proceedings.
The FCC subsequently took back NextWave’s licenses and re-auctioned them last winter in a sale that raised $15.9 billion. But NextWave successfully challenged that action in federal court and won back its licenses.
Industry and government officials had hoped to break the impasse with a controversial settlement agreement that would have given NextWave $6 billion in exchange for relinquishing control of its licenses. But powerful lawmakers such as Sens. John McCain (R-Ariz.) and Ernest Hollings (D-S.C.) said they would oppose efforts to pass legislation to cement such a deal.
Congress adjourned last month without endorsing a government decision to settle with NextWave before an industry-imposed deadline of Dec. 31.
Although many analysts think a deal now is a longshot, some smaller carriers have sought to rekindle settlement discussions. And Blair Levin, a lawyer and former FCC chief of staff who now is an investment analyst at Legg Mason Wood Walker Inc., thinks Verizon’s efforts to throw down the gauntlet may be an effort to once again put lawmakers under pressure to quickly approve a deal.
“Nothing that Verizon is doing prevents the possibility” of a new settlement, Levin said. “Tactically, if you want to wake up Congress, asking for billions of dollars in money back is a good way to do it.”
