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FCC OKs Cingular To Buy NextWave Licenses

The Federal Communications Commission (FCC) has given final approval to Cingular Wireless' $1.4 billion purchase of spectrum licenses from bankrupt NextWave Telecom, dismissing objections from Nextel that the deal would costtaxpayers more than $700 million.

Hawthorne, N.Y.-based NextWave declared bankruptcy in 1998 after it defaulted on $4.7 billion due on spectrum wireless licenses awarded to the company by the FCC in 1996. The FCC revoked NextWave's spectrum rights, arguing that the company had paid only a fraction of the $4.7 billion, and re-auctioned the rights to companies including Verizon and VoiceStream. The auction raised $16 billion.

But NextWave's lawyers filed suit, contending that U.S. bankruptcy laws protected the company from the FCC license revocation. The dispute reached the Supreme Court in January of last year, with the court ruling that the FCC had improperly seized more than 200 wireless licenses from NextWave. The FCC was forced to refund the proceeds of the spectrum auction of NextWave's licenses.

By August, NextWave annmounced the deal with Cingular Wireless, the joint venture of BellSouth Corp. and SBC Communications . Once the deal went public, Nextel filed its objections, claiming NextWave was unfairly profiting from a bankruptcy proceeding.

In Thursday's decision, the FCC said it was ultimately in the public interest to allow the license sale to Cingular since the prospect of continuing litigation over the matter would only result in substantial delays of collecting any revenue.

"There is no guarantee that the value recovered through the bankruptcy process will ultimately be any greater than that which has been negotiated through the settlement reached [between NextWave and Cingular] and it is entirely possible that it could be less and will take far longer to obtain," The FCC ruled. "We therefore believe that under these unique circumstances, granting a waiver is entirely consistent with our statutory obligations."