NextWave spectrum bidders ask for refund

Thirteen wireless companies have asked the US Federal Communications Commission (FCC) for a refund of about $3.1bn (£2.2bn) in...

Thirteen wireless companies have asked the US Federal Communications Commission (FCC) for a refund of about $3.1bn (£2.2bn) in down payments on the spectrum licences of bankrupt carrier NextWave Telecom.

The request comes as NextWave has regained the licences in court and a deal among the parties fell by the wayside with an end-of-the-year deadline.

The companies involved have told the FCC that the down payments have cost the companies at least $430,000 (£298,820) a day in lost interest revenue, equivalent to $140m (£97m) to date.

The petitioning carriers include Verizon Wireless, VoiceStream Wireless and Alaska Native Wireless. The companies have requested the FCC to act on the petition within 14 days.

NextWave went bankrupt in June 1998, defaulting on payments for $4.7bn in wireless spectrum licences it had been awarded. The FCC seized NextWave's spectrum and reauctioned it to the group of wireless carriers including Verizon and VoiceStream, but NextWave later regained the licences. NextWave argued that bankruptcy laws protect it from the FCC licence revocation, and the US Court of Appeals for the District of Columbia agreed in June last year.

After the court ruling, the carriers, the FCC and NextWave reached a deal under which the carriers would pay a total of $6bn to NextWave and $10bn to the government for the spectrum licences. However, the agreement required Congress to pass legislation by 31 December 2000 establishing a judicial review process in the matter, after which there could be no further litigation.

Congress ended the year without a vote on NextWave's legislation, effectively making the deal invalid.

Now the telecom companies involved want their money back. While asking for a refund does not necessarily end the chances for a new agreement to be reached, it will free up resources for the carriers to potentially pursue other options, said a source close to the negotiations.

The total refund requested by the 13 carriers in their petition to the FCC was about $3.2bn - $3.1bn for the NextWave spectrum and about $93m for spectrum originally awarded to Urban Comm North Carolina.

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