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The U.S. telecommunications companies battling over wireless spectrum licenses moved closer to settling their 5-year-old dispute last week, but the process will be derailed if Congress does not pass legislation recognizing the final agreement. NextWave Telecom Inc., the bankrupt holder of the licenses, told a New York bankruptcy court Nov. 2 that it is near a settlement with the government and the major wireless companies. The basic outline of a settlement calls for the wireless companies, chief among them Verizon Wireless, AT&T Wireless and Cingular Wireless, to pay the government about $11 billion and NextWave about $5 billion in exchange for the licenses. Verizon, AT&T and Cingular were the top bidders in a January auction of NextWave’s licenses held by the Federal Communications Commission. The re-auction of the licenses, which produced about $16 billion in bids, was struck down in June by the U.S. Court of Appeals for the District of Columbia. The court ruled that the FCC had acted improperly when it stripped NextWave of the licenses and then attempted to resell them. The approximately 190 licenses would allow wireless companies to expand their current capacities and prepare for the launch of so-called “third-generation” services. NextWave attorney Deborah Schrier-Rape of the Dallas law firm Andrews & Kurth told the White Plains, N.Y., bankruptcy court that NextWave, based in nearby Hawthorne, N.Y., would file a final settlement in the near future. Schrier-Rape added that shortly after it files the agreement, NextWave would present its final reorganization plan to the court. A filing, which would detail an agreement with the government and the major carriers, could come as early as Thursday when NextWave is scheduled to appear again in bankruptcy court. A settlement, though, is unlikely until Congress passes legislation that would satisfy the three main parties. If the parties agree on a cash-for-spectrum exchange some time next week, it is possible that a settlement could be filed with the expectation that the court would approve NextWave’s reorganization plan once the legislation was enacted. In short, Congress is being asked to guarantee that the parties’ settlement will resolve all outstanding legal and financial issues. After five years of lawsuits, government edicts and court decisions, the nation’s largest wireless companies are anxious to resolve the long-running tug-of-war and put the spectrum to use. The government, eager to secure money to help bankroll activities related to Sept. 11, wants to be certain it is paid and the licenses go to the winners of the January auction. It especially wants to avoid a repeat of the 1996 FCC auction in which a company, NextWave, was able to assert control over the licenses though it had failed to pay for them. NextWave, headed by its founder Allen Salmasi, a former executive at Qualcomm Inc., wants to be sure it is paid for the licenses. In addition, NextWave wants legal assurances, through federal legislation, that it will not be held liable to complaints by disaffected parties such as failed wireless startups that could argue that the agreement shortchanged them. The providers, particularly Verizon Wireless, the top bidder in the January auction at $8.7 billion, wants to be sure they own the licenses on which they bid, and won’t find themselves in court for another five years defending their ownership. Legislation safeguarding the three main parties is likely to be attached to a major bill currently moving through Congress. One likely vehicle is the Defense Department Appropriations bill. “There’s nothing magical between the DOD bill and NextWave except that right now, that’s the train that’s moving,” said a source close to the talks. Copyright (c)2001 TDD, LLC. All rights reserved.

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