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RealTime IT News

Verizon Snags More Spectrum

Verizon Wireless will pay $930 million for NextWave Telecom's New York-area spectrum license, the second key industry development in as many days.

The 10 megahertz license covers New York City, Westchester and Rockland counties and parts of northern and central New Jersey. It will be used to expand Verizon Wireless' network capacity in the area for voice and data traffic.

The transaction is expected to close by year's end. The bid will be submitted to the federal bankruptcy court overseeing NextWave's Chapter 11 proceedings next week. Applications to transfer the licenses must also be approved by antitrust regulators and the Federal Communications Commission (FCC).

A Verizon Wireless spokeswoman was not immediately available for comment. Analysts at SG Cowen & Co. said the pickup was a positive for the carrier and that the price was in line with their estimates.

"We expect [Verizon Wireless] to continue its spectrum acquisitions as the company rolls out its [next-generation] network nationwide," SG Cowen said in a note to investors.

The companies did not disclose whether there were other bids for spectrum.

Yesterday, Verizon Wireless bashed FCC commissioners for approving a spectrum swap with Nextel to alleviate congestion of airwaves used by police and fire departments.

Nextel will license 10 megahertz of contiguous spectrum currently used by public safety agencies and private wireless licensees. Those users will be relocated to a portion of the 800 megahertz band that will be turned over from Nextel.

Verizon Wireless called the decision "bizarre" given that Nextel's cell phone traffic causes the interference.

It also deemed the FCC's move a "multi-billion dollar windfall on Nextel at taxpayer expense" and called on members of Congress and the Government Accounting Office to investigate.

Verizon Wireless, as well as some telecom industry groups, had urged the FCC to auction off the spectrum earmarked for its rival.

For nine-year-old NextWave, the spectrum auction to Verizon Wireless helps move it toward its goal of emerging from Chapter 11 bankruptcy protection. NextWave also auctioned off 10 MHz licenses in two Florida markets -- Tampa and Sarasota -- for $43.5 million to MetroPCS.

Of the $973.5 million in proceeds, $398 million will go to the FCC as part of an agreement struck in April to settle federal regulators claims against it.

"We are now on a path to emerge from bankruptcy with no debt, an attractive spectrum footprint and significant cash reserves," said NextWave Chairman, President and CEO Allen Salmasi in a statement.

The company hopes to emerge from bankruptcy protection this fall.