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With a settlement near in a dispute over valuable wireless licenses among NextWave Telecom Inc., U.S. regulators and major mobile phone operators, a New York bankruptcy court Oct. 1 postponed a hearing on NextWave’s reorganization plan. The postponement, said sources, was issued in preparation for NextWave selling the licenses to the auction’s top bidders: Verizon Wireless, Alaska Native Wireless, a partner of AT&T Wireless and Salmon PCS, a partner of Cingular Wireless. The Federal Communications Commission and the big operators have battled NextWave for five years over ownership of the licenses. The FCC maintained that NextWave lost claim to those licenses when it filed for bankruptcy in June 1998. As part of a settlement, NextWave is expected to receive roughly the same amount of money, $15.8 billion, as the wireless providers had bid when the government re-auctioned NextWave’s licenses in January. NextWave would pay the government about $5 billion and keep the rest, while agreeing to terminate litigation over the licenses. “A deal appears to be nearly done,” said Michael Gill, telecom analyst at Tejas Securities Group Inc. in Austin, Texas. “This may finally be it: NextWave gets a windfall, the government gets more money, the FCC has the satisfaction of finally putting the spectrum to good use and the wireless operators walk away with the spectrum.” The bankruptcy court rescheduled the hearing for Oct. 22. The hearing was originally to be held Sept. 12, but was postponed to Oct. 1 after the attacks on New York and the Pentagon. Last week, NextWave executives, led by the company’s chairman and CEO Allen Salmasi, met with FCC officials and representatives of the wireless industry to hash out an agreement that would transfer 85 licenses that NextWave won in a 1996 auction to the winners of the January contest. The agreement, though, may hinge on whether the top bidder, Verizon Wireless, convinces the FCC to allow it to stagger its payment of $8.7 billion. One of the conditions of the January auction was that winners pay for their licenses in one lump sum. Last week, Verizon Wireless CEO Dennis Strigl wrote to FCC Chairman Michael Powell asking that the company, the nation’s largest wireless provider, have option of making “staged payments.” Strigl cited the downturn in the capital markets since January, and costs related to litigating the NextWave case as reasons a lump sum payment would not be feasible. Verizon would not comment on the letter or on the potential for a settlement with the FCC and NextWave. A spokesman said that an agreement would require the end of all legal proceedings involving the licenses. NextWave, said a source close to the company, has yet to agree to Verizon’s request. Company officials were said to have balked at Verizon’s demand, arguing that Verizon was asking the FCC for the type of payment relief it had been denied after lobbying from the wireless industry. “This is really the pot calling the kettle black,” said a source close to NextWave. The FCC stripped NextWave of its licenses in January 2000, 18 months after the company filed for bankruptcy. NextWave, which is based in Hawthorne, N.Y., but does most of its business from Washington, D.C., argued that a change in capital markets made it impossible to meet payments for its $4.7 billion winning bid. In June, NextWave won its claim to the licenses when the U.S. Court of Appeals ruled that the FCC acted improperly in stripping the company of them. Copyright (c)2001 TDD, LLC. All rights reserved.

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