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FCC Denies NextWave's Appeal from Death Row

The Federal Communications Commission turned a deaf ear to defunct wireless service provider NextWave Telecom's legal pleas to reclaim 100 PCS licenses this week.

The FCC's rejection of NextWave's request to reconsider its earlier ruling comes as no surprise, as the two entities have wrangled over the licenses for more than a year.

NextWave vigorously fought the bankruptcy court decision ruling that the spectrum was owned by the federal government, after the wireless provider defaulted on payment for the licenses. Legal maneuvers abounded and NextWave's case moved through the judiciary hierarchy, culminating in a decision rendered by the U.S. Second Circuit Court of Appeals in May.

The FCC maintained its argument that the Circuit Court of Appeals had ruled and that NextWave could not claim the licenses as assets.

In a statement concerning NextWave's final appeal to the FCC, the agency said the automatic cancellation of licenses upon nonpayment is fully consistent with the its congressional mandate.

"The full and timely payment condition is essential to the integrity of the auction and licensing process," the FCC said.

Commissioner Harold Furchtgott-Roth was the sole dissenter on the FCC's decision to take back NextWave's licenses. In a statement about the ruling, Furchtgott-Roth said the Commission should delay the re-auction of the spectrum "until there is greater clarity about the legal fate of these licenses."

Four year's ago NextWave bid that won the licenses totaled more than $4.74 billion, but the wireless provider only managed to cough up 10 percent of the licensing fees before it landed in a New York bankruptcy court.

A battle rife with mudslinging ensued. NextWave accused the FCC of being in cahoots with Nortel Networks Corp. after the Commission refused NextWave's offer to pay for the PCS licenses through a deal with the larger wireless firm.

The FCC vehemently denied that it had formed a secret pact with Nortel, explaining that the agency rejected payment for the licenses from the bankrupt wireless provider because accepting payment would undermine the integrity of its auction and licensing bureaucracy.

Like a bad plot from a made-for-TV movie, digital wireless giant Nextel Communications Inc. made a $8.3 billion hostile takeover bid for NextWave and its open wireless spectrum on December 20, 1999.

Two days later, Nextel dropped its planned acquisition of NextWave and revoked its filing with the Securities and Exchange Commission. Nextel dropped its bid after it became apparent that the FCC could legally return the open spectrum licenses to its auction process.

Nextel figured it had a better chance at winning the licenses from the FCC auction program. But Nextel's acquisition of the licenses is by no means assured as competition for room to move heats up in the wireless arena.

Since the 1996 Telecom Act was passed, the FCC has been tasked with auctioning off blocks of spectrum. The auctions have generated billions for the federal government from wireless communications companies due to the strong demand for limited spectrum.

Analysts anticipate that the FCC's much delayed November license auction will include NextWave's former spectrum inventory. In additional to Nextel and Nortel, the licenses are open to bids from SBC Communications, Verizon Communications, Sprint PCS and other major wireless players due last weeks FCC rule change.