Justices to Decide on NextWave Licenses
The Supreme Court on Monday agreed to decide whether the government must pay billions of dollars to reclaim unused wireless spectrum space from NextWave Telecom Inc.
The high court’s action will further delay resolution of the long-running dispute over valuable spectrum that could provide better mobile phone service in several cities, but some analysts think it will prompt a settlement.
At stake is extra spectrum space for wireless transmissions in overcrowded markets such as Los Angeles, New York, Chicago, San Francisco, Seattle and Philadelphia.
The stake for the federal government is huge too. Officials are hoping to avoid a possible $16-billion setback.
Six years ago, Congress and officials of the Federal Communications Commission decided to auction spectrum space to the highest bidders.
Tiny NextWave bid $4.7 billion and won 63 licenses for wireless service. The company planned to resell the licenses to other new firms, but the value of their frequencies fell and NextWave was unable to pay for what it had purchased.
The company filed for bankruptcy protection in 1998.
In response, the FCC moved to reclaim the frequencies, and a second auction--in a rising market in 2001--brought in bids of nearly $16 billion for the spectrum.
Major carriers such as Verizon, AT&T; Wireless and Cingular Wireless were among the successful bidders.
But last year, the second auction was voided when the U.S. Court of Appeals in Washington ruled that the FCC had violated the bankruptcy laws when it seized NextWave’s licenses.
Agency officials tried to work out a settlement, but Congress refused to pay for the deal.
Bush administration lawyers also appealed to the Supreme Court and urged the justices to reconsider the lower court’s bankruptcy decision.
That ruling “voided the results of a [second] spectrum auction that generated more than $15 billion in revenue for the U.S. Treasury and effectively confiscated licenses from applicants who stood ready to put the spectrum to its most efficient use,” U.S. Solicitor Gen. Theodore B. Olson told the court.
Leaders of NextWave say they too can put the spectrum to use now.
With new financing, they said they were ready to build the wireless network if their ownership of the licenses was confirmed. They urged the Supreme Court to deny the government’s appeal.
Instead, the justices will hear arguments in the fall in the case of FCC vs. NextWave Personal Communications. A ruling is not likely until next spring.
However, the court’s move does not prevent leaders of NextWave and Justice Department negotiators from negotiating a new settlement.
NextWave shares fell $2.80 to $3.10 in the pink-sheet market.
