NextWave looks to build out wireless service

Bankrupt NextWave Telecom--still adamantly maintaining use the wireless licenses it recently won back from the FCC--said it signed a deal with Lucent Technologies to build the first phase of a planned cdma2000 1X system.

The deal calls for Lucent to build a 1X system in Detroit, Mich., and Madison, Wis., as well as the company’s remaining 93 markets within 10 months.

“The spectrum is being cleared; the design work is completed; the tower sites are identified and easily accessible,” said NextWave’s Chief Operations Officer David Needham. “Our task now is to put the equipment in place, bolt it down and get ready to turn it on.”

Late last month, the U.S. Court of Appeals for the D.C. Circuit said the FCC violated bankruptcy laws when it repossessed NextWave’s licenses, canceled them last September, and reauctioned them. NextWave’s C-block PCS licenses accounted for the bulk of the almost $17 billion bid the in the January reauction.

Analysts have predicted NextWave would ultimately reach a deal with the FCC that would allow Verizon Wireless and other carriers to keep the spectrum they bid billions for, but NextWave has held steadfast publicly. The FCC is now studying the case and whether it should appeal to the U.S. Supreme Court.

But the Supreme Court was dealt the commission another blow by declining to review a lower court ruling that allowed another bankrupt C-block licensee--Metro PCS--to keep its 14 PCS licenses. Metro PCS, which changed its name from General Wireless in 1999, won the licenses after bidding $1.06 billion in the 1996 C-block reauction. The company subsequently filed for bankruptcy, with the court reducing its payment amount to the FCC to $166 million. The commission argued that lower courts had overridden the agency’s authority by lowering the payment and blocking the FCC from canceling the licenses.

Timothy O’Neil, wireless services analyst with Wit SoundView Financial Group, believes the Supreme Court’s refusal to hear the case indicates the FCC may not be able to convince the court to hear an appeal involving NextWave.

“This is a strong indication that the FCC would not have much luck trying to convince the Supreme Court to even consider overturning the current lower court decision,” he said. “Thus, the FCC will have to revoke the licenses from Verizon, AT&T Wireless and Cingular and give them back to NextWave.”