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Airwave Dispute Might Be Ending

Wireless: In settlement, NextWave would receive $5 billion to $6 billion for giving up claims.

November 08, 2001|JUBE SHIVER Jr. | TIMES STAFF WRITER

WASHINGTON — In a deal that appears to resolve a lengthy dispute over some of nation's most valuable airwaves, NextWave Telecom Inc. reached an agreement with the federal government to drop claims to $16 billion worth of wireless licenses in exchange for receiving $5 billion to $6 billion.

Under terms of the deal, whose final details were being ironed out late Wednesday, the government will sell the licenses to other carriers and NextWave will receive a payment by the end of next year.

The deal ends a tumultuous saga that began when Hawthorne, N.Y.-based NextWave failed to pay the government $4.7 billion for wireless phone licenses it won at auction in 1996. The Federal Communications Commission subsequently took back NextWave's licenses and re-auctioned them last winter to Verizon Communications Inc., VoiceStream Wireless Corp. and 19 other carriers.

But NextWave sued, and the sale was rejected by a federal court.

Negotiators in the new settlement included the Justice Department, 35 wireless carriers, the FCC and NextWave. The agreement also provides that the parties will seek legislation to provide expedited federal court review of any legal challenge of the transfer of wireless licenses by disgruntled parties.

"We are happy with the agreement that's been reached," said Amy Call, a spokeswoman for the Office of Management and Budget, another participant in the talks. "Our role has been as an advisor to protect the government's [financial] interests. And we believe those interests have been protected."

Michael K. Powell, chairman of the FCC, could not be reached for comment. And an FCC lawyer said late Wednesday that at least some commissioners had not yet been briefed on the deal.

But negotiators said a formal announcement of an agreement could come as early as today when the FCC meets for a previously scheduled monthly meeting.

On Capitol Hill, Denny Strigl, president of Verizon Wireless, quietly made the rounds Wednesday afternoon, seeking support for the agreement.

He talked to a bevy of congressional members, including powerful Rep. W.J. "Billy" Tauzin (R-La.), chairman of the House Commerce Committee.

Strigl "met with Chairman Tauzin today and basically laid out the key elements of the deal," said Tauzin aide Ken Johnson. "In the end, it's good for the federal government and consumers ... and it puts this very valuable wireless spectrum back into play."

Under the agreement, the parties will seek legislation that would award NextWave nearly $10 billion initially. The company would pay taxes on that amount and net between $5 billion and $6 billion from its settlement.

NextWave would not receive any money until Verizon and other winning wireless license bidders make at least $10 billion in payments to the federal treasury. The treasury is holding about $3 billion in bidding deposits.

And industry sources say the parties have until Dec. 31, 2002, to complete the deal.

New York-based Urban Communicators and at least one other carrier involved in the 1996 wireless auction have defaulted on their license payments.

Urban Communicators could not be reached for comment Wednesday. But it was not a party to the negotiations and has not yet indicated what action it may take.

When the wireless licenses were put up for sale in 1996, officials forecast this would usher in a new era of communications that would allow Americans to dispense with their old wired phones and stay in touch with "personal communications" wireless devices that eventually would be as diminutive as a wristwatch.

That euphoria, however, has since died down as a slumping economy has pummeled even the strongest telecommunications carriers.

Mike Shannon, an investment manager at Westchester Capital Management Inc., which holds a large number of NextWave shares, sees one winner in the dispute: faithful investors that held on to NextWave shares.

"I think the shareholders of NextWave will be happy with an agreement," Shannon said recently. "They've been through some tough times."

Shares of NextWave closed Wednesday at $11.85, up 5 cents.

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