Carriers to Feds: Pay NextWave for Spectrum

A group backed by the nations largest carriers wants federal officials to pay NextWave Telecom Inc. to give up its claim to PCS spectrum licenses.

In a letter sent last week to U.S. Attorney General John Ashcroft, the Office of Management and Budget, and the Federal Communications Commission, the carriers suggested that the government pay NextWave as much as $5 billion to give up the spectrum it won in a 1996 auction for $4.7 billion.

Those licenses were taken back by the FCC when NextWave filed for bankruptcy in 1999. The carriers that are now petitioning the government are the same ones that took part in a reauction of the Personal Communications Service spectrum in January, which attracted $16.8 billion in bids but was ultimately ruled illegal by the District of Columbia Circuit appeals court last month.

“We are at a fork in the road,” the carriers said in their letter. “The government can continue to litigate this case, possibly for several years more. Or, you can negotiate a resolution now.”

Its not clear how effective this latest plea will be. The FCC, for its part, is still scratching its head over the court decision itself. “The FCC hasnt issued any comment other than we will take the letter under review,” said Meribeth McCarrick, an FCC spokeswoman. “The commission is still reviewing the court decision that came out about a month ago.”

The letter was signed by Conrad Bagne of AT&T Corp. affiliate Alaska Native Wireless LLC; Everett Dobson of Dobson Communications Corp.; George D. Crowley Jr. of Salmon PCS, a partner of Cingular Wireless, the joint effort of SBC Communications Inc. and BellSouth Corp.; Denny Strigl of Verizon Wireless; and John Stanton of Deutsche Telekom AGs VoiceStream Wireless unit.

“This litigation … is tying up substantial blocks of precious spectrum, in markets across the country, forcing it to lie wasted and unused,” the letter stated. “The public is gaining no benefits—either in auction revenues or wireless services—from this spectrum.”

The carriers said they can start to deploy third-generation services by 2003 if they get access to the disputed airwaves. But its not that simple, according to NextWave, which claims that the carriers are tying things up.

“The same carriers who urged the agency to stop NextWaves reorganization are again threatening to tie up NextWaves licenses with further litigation until their demands are met,” said Michael Wack, deputy general counsel for NextWave, in Hawthorne, N.Y. “Its time to stop litigating and start building out.”

“The company intends to retain the licenses and build them out,” Wack said. “I dont know how many different ways we can say that.”

NextWave insisted that it will complete a build-out of Code Division Multiple Access networks in the Midwest within the next 10 months, using network equipment from Lucent Technologies Inc.

In addition to putting pressure on NextWave, the carriers are eager to get hold of spectrum currently used by the Department of Defense. “Much of the spectrum the Department of Defense is using sporadically can be utilized much more efficiently by a competitive industry that must maximize its use,” Tom Wheeler, president and CEO of the Cellular Telecommunications & Internet Association, told the House Subcommittee on Telecommunications, Trade and Consumer Protection last week.