NextWave Gets Funding for Network

 
 
By Carmen Nobel  |  Posted 2001-08-27 Print this article Print
 
 
 
 
 
 
 

NextWave Telecom Inc., the bankrupt wireless carrier that has been fighting to retain rights to personal communications services spectrum, has received a $2.5 billion loan commitment from UBS Warburg Ltd. to fund the build-out of a next-generation wireles

NextWave Telecom Inc., the bankrupt wireless carrier that has been fighting to retain rights to personal communications services spectrum, has received a $2.5 billion loan commitment from UBS Warburg Ltd. to fund the build-out of a next-generation wireless network. But the fate of the spectrum is not yet clear of court decisions and red tape.

The funding is the latest chapter in a long-running spectrum drama. Earlier this month, San Diego-based Qualcomm Inc. announced it is investing $300 million in NextWave, of Hawthorne, N.Y. Qualcomm officials said the money is part of $5 billion NextWave has received from investors since winning an appeals court case against the Federal Communications Commission in June. NextWave plans to use that money to pay the U.S. government the full amount owed for radio spectrum licenses it won in a 1996 auction.

In 1999, NextWave filed for bankruptcy, and the FCC revoked those licenses. The agency reauctioned the licenses in January, realizing a far larger profit than it did with the first auction. Verizon Wireless, VoiceStream Wireless Corp. and Alaska Native Wireless LLC, which is backed by AT&T Corp., paid nearly $17 billion for the spectrum. But in June, a federal appeals court ruled that the FCC had violated bankruptcy laws and that NextWave should keep the spectrum.

Despite the funding and NextWaves recent court victories, some industry observers have doubts about the companys viability—namely, its initial network plans for the end of this year and the beginning of next, which support data only and not voice.

"I could see them getting the licenses back because they can make money on them, but why would someone want to build out their own network now?" asked Ken Dulaney, an analyst at Gartner Inc., in San Jose, Calif. "Consolidation is the wave of the future. Theyve got to have a screw loose. A data-only network? Are they nuts?"

Since the appeals court decision, the FCC has said it will take its spectrum battle with NextWave to the Supreme Court.

Major wireless carriers have been crying foul since NextWave won the appeal in June, claiming that NextWave cant afford to support a next-generation wireless network. Last month, the heads of several carriers signed a letter asking that the government pay NextWave to give up its claim to the licenses. NextWave officials continue to insist the company is capable of supporting a network running on CDMA2000.

 
 
 
 
 
 
 
 
 
 
 

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