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Verizon Wireless said Thursday it will not participate in discussions to settle ownership of 90 coveted wireless spectrum licenses owned by NextWave Telecom Inc. until it receives a $1.7 billion down payment it made for the licenses a year ago. Verizon’s announcement increases the likelihood that the U.S. Supreme Court will decide the long-running tug-of-war over licenses covering the country’s largest markets. Verizon’s ultimatum follows a formal petition to the Federal Communications Commission made recently along with 11 other wireless companies that participated in a re-auction of NextWave’s licenses in January 2001. A federal court voided that auction. The 12 companies, which bid nearly $16 billion in the reauction, asked the government to return $3.1 billion in deposits until a settlement with Hawthorne, N.Y.-based NextWave could be finalized. NextWave declined comment. But sources close to the company have said it would be willing to listen to other deals, with or without Verizon. The FCC did not return calls. During the past year, the companies often expressed frustration that the government was holding onto the non-interest bearing deposits while the NextWave case went unresolved. The wireless providers said they lost roughly $140 million when the FCC held the deposits during 2001. As the largest bidder in the reauction, Verizon’s decision to back away from talks unless it gets its money back could leave the Supreme Court as the final arbiter of the six-year-old case. It could also greatly reduce the government’s cut in any settlement the carriers would negotiate with NextWave independent of the FCC, said David Kaut, telecom analyst at Legg Mason Inc. “Verizon has very little to lose by this, and it puts more pressure on the FCC,” Kaut said. “There is still a possibility for a deal but it might be a different kind of a deal than the one signed last year.” During the fall, a tentative settlement was reached between the three parties in which NextWave would hand over the licenses to the FCC and the carriers would pay $10 billion to NextWave and $6 billion to the government. After taxes, NextWave would likely then pay the government $4 billion. NextWave must decide this week whether to file a response with the Supreme Court to an appeal that the FCC and the carriers made last year contesting a June 2001 lower court decision that ruled that that government improperly pulled the licenses from NextWave in 1998. In the wake of Verizon’s announcement, it appears more likely that NextWave will file a response. NextWave officials could not be reached for comment. If NextWave files its response and a settlement cannot be reached, the Court would likely decide sometime in February whether to hear the case. And if the lower court ruling is upheld, NextWave could be left to negotiate a settlement directly with Verizon, Cingular Wireless, AT&T Wireless and the other carriers that bid on NextWave’s licenses. Last year’s settlement failed when stiff opposition prevented a vote from taking place before Congress adjourned at the end of last year. The deal, which had the support of the New York bankruptcy court hearing the NextWave case, expired Dec. 31. Congressional approval was needed for the FCC to execute the transaction and expedite legal maneuvering around the case. Opponents such as Sen. Ernest Hollings, D.-S.C., charged that a company that had defaulted on billions of dollar of debts to the government should not be allowed to walk away with a multi-billion dollar settlement. Copyright (c)2002 TDD, LLC. All rights reserved.

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