The shakeout continues.
NextWave Telecom Inc.-which had the potential to be the nation’s largest PCS operator-followed two of its C-block counterparts last week and filed for Chapter 11 bankruptcy protection.
It seems these bidders believe they can get more relief from the judicial system than they can from choosing one of the Federal Communications Commission’s restructuring options. (Does the “C” in C-block stand for Chapter 11?)
Will bankruptcy protection be the great savior for NextWave, Pocket Communications Inc. and General Wireless Inc?
Who knows? Pocket most likely will not look the same after it emerges from bankruptcy court. General Wireless, on the other hand, seems to have shown early success in court, where the judge valued GWI licenses at less than 10 cents on the dollar. The ruling is under appeal.
It comes as no surprise that NextWave decided to roll the dice for a favorable ruling before a judge-especially once the GWI case set a precedent-rather than choose a restructuring option.
Whether NextWave’s bankruptcy option enables the carrier to restructure is up in the air. But the larger question remains: Can NextWave still build out CDMA service and gain a significant customer base?
CDMA carrier Sprint PCS leads all PCS carriers with a 37-percent market share, according to new information from The Strategis Group. PrimeCo, which also offers CDMA service, is listed in second place with a 16-percent market share.
These two carriers already offer service in some of NextWave’s largest markets. (A notable exception is Las Vegas.)
In order to be successful, NextWave will have to bring something different to those markets than Sprint and PrimeCo already offer.
It’s a formidable challenge. And one that certainly would take a heavy cash infusion.
NextWave likely could have been one of the companies to benefit from the implementation of the World Trade Organization pact and received funding from outside the United States, but the Asian currency crisis dimmed those prospects.
In the end, there will be a handful of large-scale PCS carriers.
And with each turn of events, it looks better for the big A- and B-block guys.
