NextWave, FCC battle continues over wireless licenses
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Despite several rounds in court and a second auction that brought in a potential $17 billion in revenue for the federal government, it's still not clear who owns 216 Personal Communications Service wireless licenses.
Last month the U.S. Court of Appeals in Washington, D.C. reversed a previous ruling that stated the Federal Communications Commission acted within its rights in repossessing PCS licenses due to nonpayment. These PCS licenses were originally auctioned off in May through July 1996 bringing in more than $10 billion for the federal government.
But NextWave Personal Communications, one of the companies that had to return its licenses, sued the FCC claiming it was protected under bankruptcy laws. While the FCC won two previous court rulings, the Court of Appeals last week agreed with NextWave's point of view. But, since this case started nearly four years ago, there is no simple resolution.
In January the FCC reauctioned NextWave's 216 C-block PCS licenses along with 206 licenses that were returned to the FCC by companies that could no longer pay for them.
Big-name wireless providers such as Verizon, Cingular (BellSouth and SBC's joint venture), VoiceStream and an AT&T affiliate called Alaska Native bid billions on individual licenses (see chart).
Some wireless providers planned to use this C-block spectrum to increase coverage in cities where they already offer services, says Eugene Signorini, an analyst at The Yankee Group. The delay won't cause immediate trouble for these companies or their customers, but could be problematic later as the service providers launch next-generation voice and data services.
Other companies such as Cingular, which was buying spectrum to expand its network into cities where it did not have coverage, will not be able to do so until the spectrum ownership issue is resolved, Signorini says. "The next auction, for the 700-MHz spectrum, isn't scheduled until September, and it's been postponed three times already."
An FCC spokeswoman says that 17 licenses from the reauction have been distributed, but none of these belonged to NextWave. While she declined to comment on the FCC's next step she implied it would take place in the courts.
Service providers such as Verizon Wireless are hoping for a quick resolution. Denny Strigl, the company's president and CEO, issued a written statement that says, "we are disappointed by the Court's decision. The FCC and NextWave need to settle this dispute in a way that permits the FCC's auction results to stand and this spectrum to be quickly deployed."
NextWave's fight is creating opportunities for other service providers, such as Metro PCS, which also defaulted on its payments and had to return its licenses. Late last week a court ruled that the 14 PCS licenses the service provider won in 1996 should be returned.
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