RealTime IT News

FCC Opens NextWave Spectrum Auction

Spectrum once held by NextWave Telecom went on sale this morning with 35 wireless companies bidding for the 242 licenses. With more than 2400 MHz up for bids, the Federal Communications Commission (FCC) expects to reap billions from cell phone companies.

The auction covers spectrum in Los Angeles and Denver as well as smaller markets throughout the country. FCC spokeswoman Lauren Patrich said the auction could take several weeks.

The FCC auction process makes all licenses available for bidding throughout the entire auction with successive rounds. After each round closes, round results are processed and made public. Only then do bidders learn about the bids placed by other bidders. The auction ends when there are no more bidders.

Among the bidders expected to make aggressive bids for the spectrum are Verizon Wireless, the joint venture between Verizon Communications and Vodafone , and T-Mobile. Cingular, the country's number one wireless provider, may be less aggressive since it obtained additional spectrum when it acquired AT&T Wireless for $41 billion.

NextWave declared bankruptcy after defaulting 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 what it promised, and re-auctioned the rights to companies including Verizon and VoiceStream.

NextWave sued, however, 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.

Ultimately, NextWave sold some of its spectrum to Cingular for $1.4 billion. From those proceeds, NextWave paid the FCC $714 million and returned spectrum covering the equivalent of 155 10 MHz licenses in 60 markets where it is licensed to provide digital cellular service.