GOVT. REACHES SETTLEMENT WITH NEXTWAVE
The “vast majority” of the spectrum tied up in litigation since NextWave went bankrupt in 1998, could be “immediately” made available for other uses, the FCC said late Tues. It said the govt. had reached an agreement to that effect with NextWave on the company’s broadband PCS licenses, which have been in dispute since 1996. The deal is subject to approval of the U.S. Bankruptcy Court, Manhattan.
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The dispute goes back to 1996-1997, when NextWave bought dozens of wireless spectrum licenses in FCC auctions for about $4.8 billion. While the company was entitled to pay over time for the licenses it purchased, it declined to do so in 1998, when it filed for bankruptcy protection after making a down payment of $500 million. Each license granted to NextWave was conditioned on the company’s full and timely payment of all its installments and made clear that failure to make such payment caused automatic cancellation.
Specifically, the agreement: (1) Provides for the immediate return of spectrum licenses that will account for at least 90% of NextWave’s spectrum, when licenses already sold to Cingular Wireless are taken into account. (2) Contemplates total cash recovery, including NextWave’s down payment, of $1.6 billion if anticipated sales occur. (3) Results in a total cash and spectrum recovery of at least $4 billion based on NextWave’s original purchase price. (4) Requires additional cash payment to the U.S. Treasury if there is a dramatic increase in value and sale of the spectrum that NextWave retains. (5) Extinguishes any potential claims for damages against the FCC and the federal govt. (6) Builds in safeguards to ensure prompt and timely payment by NextWave. (7) Avoids the use of debt instruments, which could be subject to further default and delay.
The FCC said the govt. had 3 overarching goals in settling the case: (1) Putting the NextWave spectrum up for active use. (2) Recouping value from NextWave for the federal govt. (3) Facilitating a final resolution to the entire matter within the context of the Supreme Court’s NextWave opinion. FCC Chmn Powell praised the settlement: “Ending one of the most hotly contended legal battles with a commercial solution that results in over $4 billion in value to taxpayers makes this settlement a success for the American people.” He said the “landmark” agreement took “valuable spectrum resources out of the courts and will put it in the hands of consumers who can finally use it… After eight long years, we can finally end the litigation and begin the innovation.”