US Regulator May Void NextWave Spectrum Auction

The USA telecoms regulator, the FCC has started a public consultation on plans to cancel the licenses awarded in the spectrum auction that occurred last January. The licenses have still not been awarded due to court action by Nextwave which had owned the spectrum before the FCC resold it following non-payment by NextWave.

While the licenses are still to be awarded, the regulator has maintained that the networks are still legally committed to paying for the licenses when they are finally awarded. Verizon Wireless has been the most vocal company in arguing that the FCC had broken its obligations in not handing the licenses over in a timely manner, and that the auction should be voided. Verizon Wireless, which bid more than US$8 billion in the auction, urged the FCC to acknowledge that winning bidders have the ability to opt out of their bids earlier this year when it became clear that licenses were not going to be transferred to winners in a timely fashion.

Denny Strigl, president and CEO of Verizon Wireless said "FCC Chairman Michael Powell is doing the right thing. With an overhang of more than $16 billion for nearly two years, the entire U.S. wireless industry has suffered in limbo. We appreciate that the Commission recognizes the tremendous turmoil in the wireless and telecom marketplace. The Commission should promptly act on these proposals."

On March 26th, the FCC granted partial refunds of the down payments made by certain winning bidders in the auction. These winning bidders had made down payments and filed long-form applications for spectrum associated with licenses that had previously been issued to NextWave, amongst others.

The FCC has already refunded approximately US$2.8 billion to the bidders who have not yet received their licenses, but it retained an amount equal to 3% of the net winning bids for these licenses and maintained the pending status of the applications for these licenses. The total amount still on deposit with the Commission is US$489,548,061. The total amount of the auction winners' obligations, including the refunded down payments, to the government for the former NextWave and Urban Comm licenses won at the auction is US$16,318,268,700. The Commission has already received US$504,419,150 in final payments for other licenses won and granted in the auction.'"

Posted to the site on 16th September 2002