WASHINGTON-NextWave Telecom, a one-time poster child for everything that went wrong with the U.S. government’s C-block auction for PCS licenses, said it stands ready to continue to build its network, following a U.S. appeals court ruling 22 June that said the government could not cancel NextWave’s 90 licenses.
NextWave said it has US$90 million in debtor-in-possession financing from recent bankruptcy-court-approved financing.
“Having this financing on hand enables us to resume critical construction activities, such as fine-tuning our network design and switch engineering, completing microwave clearance, establishing our backhaul network and local interconnection arrangements, and finalizing tower site selection and development,” said NextWave Chairman Allen Salmasi. “The funds give us the capability to jump start our overall network deployment effort while we put the finishing touches on a reorganization plan that will fund a full-scale network buildout. We feel very fortunate to be in a position where we can get out of the courtroom, get into the field, and resume doing the things the company was created to do, which are to build wireless networks and serve customers.”
A federal appeals court said the Federal Communications Commission (FCC) could not cancel for non-payment NextWave’s C- and F-block licenses, noting the carrier was protected by the bankruptcy code-thus throwing into chaos the status of the licenses the FCC re-auctioned earlier this year.
NextWave originally bid US$4.7 billion for the 90 licenses. When the FCC took back the licenses and re-auctioned them, the agency split the licenses into smaller chunks of spectrum and raised nearly US$17 billion. However, none of the carriers that “won” licenses in the re-auction have made final payment yet. As part of the re-auction, the FCC warned that the licenses were under a cloud of legal uncertainty.
“Having chosen instead a scheme that put it in a creditor-debtor (and lienholder) relationship with its licensees and conditioned licenses on timely payment of their debts, and having as a consequence run afoul of [the bankruptcy code], the [FCC] may not escape that provision’s clear command simply because it acted for a regulatory purpose. … We therefore reverse and remand to the [FCC] for proceedings not inconsistent with this opinion,” said the U.S. Court of Appeals for the District of Columbia Circuit.
NextWave was ecstatic about the opinion, while the FCC said it was “reviewing the decision” and could not comment any further.
“As the record of our reorganization proceeding demonstrates, NextWave has been ready, willing, and able for several years now to pay its debts to the FCC and other creditors in full, deploy state-of-the-art wireless facilities, and offer the public new competitive services. Now that the Court of Appeals has spoken, we look forward to pouring all of our energies into those tasks. NextWave sincerely hopes that today’s decision marks the end of this litigation, and that it clears the way for us to resume our deployment efforts and begin delivering high-quality wireless services to consumers,” Salmasi said.
It now looks like wireless companies hoping to gain access to spectrum in constrained markets will have to go hat-in-hand to NextWave to rent the spectrum in much the way NextWave planned in its original business model.
NextWave billed itself as a carrier’s carrier, planning to build out a network and then lease capacity on that network to carriers to market to end users.
