WASHINGTON-In an effort to prove it is a viable company and at the same time help a struggling icon, bankrupt NextWave Telecom Inc. said on July 2 it has signed a contract with Lucent Technologies Inc. to begin building out a CDMA network.
“We are pleased to have Lucent Technologies as one of our primary infrastructure suppliers. Their proven expertise in designing, manufacturing and deploying wireless telecommunications networks is globally renowned. With their support under this agreement, we will begin to build one of the most advanced IP-based networks in the world, one that will help maintain America’s leadership in broadband wireless technology,” said Allen Salmasi, NextWave’s chief executive officer and chairman of the board.
The NextWave plan calls for Lucent to build a voice and data network using cdma2000 1x technology in Detroit and Madison, Wis., and a data network in its remaining 93 markets.
A federal appeals court last month reversed actions by the Federal Communications Commission to reclaim and re-auction NextWave’s spectrum. Since then, speculation has been rampant that NextWave would sell its spectrum either back to the government or to the winning bidders rather than build out its network. NextWave insists it intends to be a carrier’s carrier.
Under its business concept of a carrier’s carrier, NextWave plans to build out its network and then sell its capacity to carriers looking to augment capacity on their networks or to resellers wishing to brand a network without having the expenses of buying spectrum and building out a network.
By choosing CDMA technology, NextWave appears to be going after Verizon Wireless and Sprint PCS.
Verizon Wireless bid $8.8 billion for a large portion of NextWave’s spectrum, including more than $4 billion for New York. NextWave said it is not concerned with Verizon’s recent wavering on what type of third-generation wireless technology to use.
“Allen is first and foremost a technologist with roots in wireless going back to his days at NASA [the National Aeronautics and Space Administration]. He took a look at all of the existing technologies and tried to peer over the horizon. … It is his feeling that the evidence suggests that cdma2000 will turn out to be the most robust when deployed in the field,” said Michael Wack, NextWave’s senior vice president and deputy general counsel.
The nation’s other CDMA carrier, Sprint PCS, has said it is not spectrum starved. Blair Levin, former FCC chief of staff and now an analyst with Legg-Mason, said Sprint actually is in the best position to benefit in the wake of the decision by the U.S. Court of Appeals for the District of Columbia Circuit.
Wack said he is not aware of any discussions with Virgin Mobile, the large British mobile reseller-sometimes called a mobile virtual network operator-owned by Richard Branson.
“We are in discussions with a lot of people-names you would recognize, some you wouldn’t. I don’t know that we are in a discussions with Virgin,” said Wack.
NextWave said it plans to pay $100 million in cash to Lucent to build out its network.
If the deal is completed, it could signal the beginnings of a rebound for the manufacturing company. Lucent-the once revered Bell Labs of AT&T Corp.-has seen its stock and stature fall in the wake of the bursting of the technology bubble.
The $100 million is the remaining portion of re-financing money approved by the bankruptcy court last month before the D.C. Circuit decision. NextWave still is looking to raise the funds necessary to pay off the $4.7 billion it owes the government for the spectrum and to complete buildout of its network. Nevertheless, network buildout is expected to be completed within 10 months.
“The spectrum is being cleared; the design work is completed; the tower sites are identified and easily accessible,” said David Needham, NextWave’s chief operations officer. “We’re more than ready to begin operationalizing our plans with this agreement with Lucent. Our task now is to put the equipment in place, bolt it down, and get ready to turn it on.”
