NextWave Wins Back Wireless Licenses

In a major victory for bankrupt wireless carrier NextWave Telecom, the U.S.
Supreme Court Monday ruled that the Federal Communications Commission (FCC)
improperly seized more than 200 wireless licenses from the company when it
declared bankruptcy.

“The Supreme Court’s decision brings much needed certainty to an unsettled area of the law,” FCC Chairman Michael Powell said in a statement after the ruling. “We are in the process of examining all of the ramifications of the Court’s decision. The Commission will faithfully implement the Court’s mandate and looks forward to facilitating the provision of service in these bands to the American people as soon as practicable.”

Hawthorne, NY-based NextWave declared bankruptcy in 1998 and defaulted on $4.7 billion due
on spectrum wireless licenses awarded to the company by the 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 to companies
including Verizon and VoiceStream. The auction raised $16 billion.


But NextWave’s lawyers filed suit, contending that U.S. bankruptcy laws
protected the company from the FCC license revocation. The U.S. Court of
Appeals for the District of Columbia agreed with NextWave in June 2001,
leading the Bush administration to lobby the Supreme Court to intervene and
establish a ruling in the case. The administration asked the justices to
determine what options are available to the government when a
telecommunications company fails to pay for FCC spectrum licenses.

In an 8 to 1 decision Monday, the Supreme Court dashed the FCC’s arguments
that it had a valid regulatory motive for seizing the licenses. The court
approved the appeals court decision, which nullified the FCC’s
re-auctioning of the licenses, and returned them to NextWave.


During the course of the legal battle, the licenses — which cover spectrum
in markets including Chicago, Los Angeles, New York, Philadelphia, San
Francisco, Seattle and Washington — languished. With the case resolved,
NextWave can either build out its network or sell the licenses to other
companies — though the decline of the telecommunications industry in 2001 and 2002
likely means NextWave will not approach the $16 billion the FCC saw in its
re-auction.

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