NextWave Lands in Supreme Court

The next step in the tangled legal woes of NextWave is the Supreme Court, which on Monday decided it would hear the case involving the bankrupt cellular carrier and its disputed spectrum rights.

In June of 1996, NextWave declared bankruptcy and defaulted on $4.7 billion due on spectrum wireless licenses awarded to the company by the Federal Communications Commission (FCC). The FCC seized NextWave’s spectrum rights, arguing that the company had paid on a fraction of the $4.7 billion, and re-auctioned the rights last January to companies including Verizon and VoiceStream. The auction raised $16 billion.

NextWave’s lawyers filed suit, contending that U.S. bankruptcy laws protected the company from the FCC license revocation. In June, the U.S. Court of Appeals for the District of Columbia agreed with NextWave.

Meanwhile, throughout the second half of last year, NextWave, the FCC and the Department of Justice attempted to broker a deal over the disputed licenses. That fell through when Congress killed a proposed a deal that would have paid NextWave $5.8 billion and transferred the spectrum rights to the new owners.

Frustrated by court actions and FCC rulings, Verizon and other carriers last month began seeking a refund of their deposits, seeking approximately $3.2 billion.

The Bush administration has been lobbying the Supreme Court to establish a ruling in the complicated case, asking the justices to determine what options are available to the government when a telecommunications company fails to pay for FCC spectrum licenses.