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Wireless Firms May Restore Deal for Airwaves

January 04, 2002|From Bloomberg News

U.S. mobile-phone carriers will consider restoring an agreement that gives them control of $15.9 billion worth of airwaves held by bankrupt NextWave Telecom Inc.

Verizon Wireless Inc., Leap Wireless International Inc. and other carriers reached an agreement late last year giving NextWave more than $5 billion to drop legal claims to the airwaves so the bigger companies could buy them from the government for $10 billion.

The plan expired Monday because Congress failed to act on the measure as required before adjourning in December.

Leap would like to extend the deadline for congressional action by 90 days if the companies determine "there is a real potential" to get lawmaker approval, said Leap spokesman Dan Pegg.

"We think we're in striking distance of an agreement, and we just ran out of time," Pegg said. "The coalition is going to be exploring their options now that the holidays are over."

Verizon spokesman Jeffrey Nelson declined to comment, as did NextWave deputy general counsel Michael Wack. Representatives for other companies involved in the dispute couldn't be reached to comment.

At issue is a dispute that began in 1996, when NextWave bid $4.7billion in a federal auction for licenses to use the airwaves. The company paid $500 million before filing for bankruptcy protection in 1998 and defaulting on the remaining payments. The Federal Communications Commission repossessed the airwaves and held an auction in January 2001, raising $15.9 billion from 21 carriers.

A U.S. appeals court in June said the FCC violated bankruptcy law and ordered the licenses returned to NextWave. The FCC appealed to the Supreme Court and then reached a settlement agreement with NextWave.

The deal faced opposition from key lawmakers who worried it was being rushed through Congress. Sen. Ernest F. Hollings (D.-S.C.), who oversees telecommunications issues, wanted to hold a hearing on the matter this year.

Leap may not agree to wait much more than 90 days after Congress reconvenes Jan. 23 to get approval for the agreement, Pegg said. That's because the federal government is holding $85 million that Leap paid after the auction to back its bids. If it can't get the airwaves, it could use the money for other purposes.

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