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.

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