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Efforts to reach a settlement in the five-year dispute over wireless spectrum licenses owned by bankrupt NextWave Telecom Inc. were upset last week by the anthrax scare in Washington, D.C., and by Verizon Wireless’ tough negotiating, telecommunications industry sources said Thursday. Officials from NextWave, the Federal Communications Commission and the nation’s largest wireless providers remain in talks to resolve ownership of more than 200 valuable licenses necessary to operate wireless services. But with security issues distracting Congress, sources said it appeared doubtful that legislation intended to stave off lawsuits challenging a settlement could be finalized. The spectrum-for-cash settlement expected this week calls for the winners of the government’s January re-auction of NextWave’s licenses to make payments totaling about $16 billion. The government stands to receive about $10 billion to $11 billion while the remainder would go to NextWave, of Hawthorne, N.Y. In recent days, however, Verizon, which bid the most — $8.8 billion — has sought legislative protection from lawsuits that might arise from former bidders. In addition, Verizon wants Congress to provide for expedited reviews of the settlement. Though lawmakers appear ready to pass such a bill into law, Verizon’s request that additional payments on its bid be extended until the end of 2002 has faced resistance. The Bush administration, needing revenue in the wake of the Sept. 11 attacks, wants to resolve the NextWave matter as soon as possible, sources said. And that means holding Verizon to as prompt a payment schedule as possible. In September, Verizon Wireless CEO Dennis Strigl sent a letter to FCC Chairman Michael Powell asking for the option of making “staged payments.” Strigl cited the downturn in the capital markets and costs related to litigating the NextWave case as reasons a lump sum would strain the company’s finances. A Verizon spokesman complained Thursday that while the company made a $1.8 billion down payment on the licenses in March, that money is not earning interest. “We’d very much like to see this situation resolved and the spectrum put to proper use,” said Verizon spokesman Jeffrey Nelson. NextWave declined to comment. Industry watchers had expected that the NextWave case would at long last reach an out-of-court settlement last week. One reason was that the FCC has until Friday to seek U.S. Supreme Court review of an unfavorable June decision by the U.S. Court of Appeals for the D.C. Circuit. The controversial ruling found that the FCC had acted illegally when it stripped NextWave of its licenses in January 2000. The FCC had argued that NextWave forfeited the licenses after it filed for bankruptcy in 1998. NextWave countered that a change in the value of the licenses in 1997 made it impossible for the company to meet payments connected to its winning bid of $4.7 billion. NextWave successfully argued that the licenses were protected when the company filed for Chapter 11 protection. Blair Levin, a telecom analyst at Legg Mason Inc., said the government could easily file the appeal and then withdraw it after a settlement was finalized. “That was more of a motivator than a real deadline,” Levin said. The second reason for expecting a settlement was that the U.S. Bankruptcy Court for the Southern District of New York is scheduled to begin reviewing NextWave’s reorganization plan today. Sources, however, say that hearing is likely to be postponed to allow settlement talks to continue. Verizon, Cingular Wireless and AT&T Wireless, the top three bidders in the January auction, were hoping to convince the court to prevent NextWave from emerging from bankruptcy. Copyright (c)2001 TDD, LLC. All rights reserved.

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