Verizon sues FCC over $1.7bn spectrum deposit

Verizon Wireless is taking the US Federal Communications Commission (FCC) to court after waiting a month for the refund of...

Verizon Wireless is taking the US Federal Communications Commission (FCC) to court after waiting a month for the refund of deposits for spectrum licences it will almost certainly never receive.

The company has filed suit against the FCC in the US Court of Appeals for the District of Columbia, demanding that the FCC return Verizon's $1.7bn (£1.2bn) deposit. The deposit formed part payment of licences won at auction after the original licence holder, NextWave Telecom, filed for bankruptcy protection. The suit also demands that the FCC admit the auction was invalid and that carriers have no remaining financial obligations.

The FCC still has $3.2bn (£2.3bn) in deposits made by 13 wireless carriers, including AT&T Wireless Services and VoiceStream Wireless. The licences were auctioned after NextWave defaulted on payments in 1998. Though originally sold for $4.7bn, the spectrum sold for $17bn in the new auction.

However, NextWave reclaimed the licences in a federal appeals court in June, arguing that bankruptcy laws protect it from the FCC licence revocation.

The winning bidders tried to work out a deal with NextWave and the FCC after the appeals ruling. However the agreement to transfer the licences back to the carriers fell through when Congress did not pass the necessary legislation by the end of last year.

While the FCC returned the spectrum to NextWave promptly after the appeals court decision, it held onto the auction deposits while negotiations continued. The FCC required that bidders put down 20% of their winning bid as a deposit. Verizon Wireless, a joint venture of Verizon Communications and Vodafone Group won the largest share of the spectrum.

The carriers petitioned the FCC for a return of their deposits in January. Verizon claims it is losing $250,000 (£176,883) a day in income from interest on the $1.7bn held by the FCC.

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