RealTime IT News

Verizon Wireless Wins Spectrum

The Federal Communications Commission (FCC) approved late Wednesday afternoon Verizon Wireless' $3 billion cash deal for NextWave's spectrum licenses, only one day after a federal bankruptcy court approved NextWave's reorganization plan.

The deal allows Verizon Wireless, a joint venture between regional carrier Verizon Communications and British telecom Vodafone , to boost its wireless capacity in 22 markets, including Baltimore, Boston, Los Angeles, New York and Washington, D.C. It also expands its coverage into the Tulsa, Okla., area.

Verizon Wireless plans to pay for the purchase of the 10 megahertz and 20 megahertz licenses through cash flow from operations and inter-company loans.

While the FCC has not officially announced its approval of the spectrum sale, Verizon Wireless spokeswoman Nancy Stark confirmed the federal blessing. The transaction already has been approved by the bankruptcy court and has cleared the Hart-Scott-Rodino antitrust review process.

The bankruptcy court's reorganization approval also clears the way for NextWave to launch commercial broadband operations in Las Vegas and New York City.

"Today is a very special day for NextWave and all its stakeholders," Allen Salmasi, NextWave's chairman and CEO, said in a statement after the bankruptcy court approved the reorganization plan. "It has been a long and challenging road to get to this moment, which makes it all the more special. We are pleased that the years of effort have resulted in a plan that pays creditors in full and provides for significant distributions to equity holders."

NextWave filed for bankruptcy protection six years ago after it was unable to produce nearly $5 billion for spectrum licenses it won in a government auction.

The FCC revoked the spectrum rights NextWave won in the controversial 1996 FCC auction, arguing that the company had paid only a fraction of what it promised and re-auctioned the rights to companies, such as Verizon and VoiceStream.

But NextWave sued, contending that U.S. bankruptcy laws protected the company from the FCC license revocation. The dispute reached the Supreme Court in January 2003, with the court ruling that the FCC had improperly seized more than 200 wireless licenses from NextWave. The FCC was forced to refund the $16 billion in proceeds from the sale of NextWave's licenses.