NextWave Awash in Deluge of Apathy


Even if NextWave Telecom Inc. does emerge from bankruptcy, without the slice of wireless spectrum it won in a Federal Communications Commission auction in 1996, the company's fate lies in the hands of its creditors.

Last week, after the FCC revoked NextWave's licenses and rejected a cash payment of $4.3 billion tendered under the company's reorganization plan, the bankruptcy judge presiding over the case ordered the FCC to appear in federal court to defend its actions.

That move followed a request by NextWave to declare the agency's actions as null and void under federal bankruptcy code. NextWave officials could not be reached for comment.

In a statement issued last week, however, NextWave argued that "the effect of the FCC's purported actions is to deny the taxpayers of the United States full payment for the licenses and deny consumers the beneficial use of the licenses for an extended period while litigation continues. In deference to consumers and taxpayers, and to the rule of law, the FCC should accept NextWave's tendered payment and clear the way for the licenses to be put into use immediately."

The federal agency rejected NextWave's claim.

"It's a dispute over jurisdiction," said one FCC official. "It is the [FCC] general counsel's view that bankruptcy doesn't protect NextWave from regulatory issues. It protects them against creditors from collecting money and going after their assets. It was the Second Circuit Court's decision that the FCC was acting in a regulatory capacity, not as a creditor."

Many on Wall Street were quick to side with the FCC. Few believe NextWave will be able to hold onto its licenses.

"Every analyst thinks they're dead," said one industry watcher "You're still going to have fireworks from them, but without an asset, who cares?"

Instead, attention has shifted toward the FCC's scheduled re-auction of the C-Block licenses in July. C-Block licenses are reserved for relatively small, entrepreneurial wireless providers. While FCC policy demands that the licenses be sold under the same regulations as in the original auction, the agency is postponing a decision on who can bid until it weighs public comment.

"We have not in the past changed our rules, but we have not made any decisions," said the FCC official. "There's a lot of people here who are very irritated with NextWave. They fought us in the courts at every step; it's been very contentious."

Nextel Communications is expected to weigh in heavily. Nextel has already placed several multi-billion dollar bids for the licenses. Some analysts have cautioned that Nextel does not have enough wireless spectrum to meet its growth demand.

"It's hard to know how the politics would hit... people are very concerned about maximizing revenue because this has been such a high-profile disaster," said the FCC source.