Second Chance for Greener Grass?

Nextwave's licenses represent a majority of the C-block spectrum, but what real value do they hold for other C-block carriers? The question of fairness comes to mind when discussing Nextwave's bankruptcy court proceedings. Should Nextwave be given a second chance to operate with lower costs?

"I don't know if either way is a good deal for Nextwave," said Brian Cotton, Frost & Sullivan wireless communications industry manager. "They'd probably get a better deal from the FCC, but if they were able to develop that spectrum, I don't know if they would get a return on it in the long term."

According to Bill McKell, Horizon Personal Communications president, the FCC had an opportunity to deal with payment issues up front, before the companies went bankrupt, but refused to do it.

"It's not fair, but the process wasn't fair from the beginning," he said.

It still is uncertain what will become of the C-block licenses, but whatever the outcome, the decision will set a precedent.

"I think it's important that the courts are looking at what those licenses are really worth, allowing them to pay a price that is appropriate," McKell said.

According to Cotton, the FCC is sending a confusing message, and maybe a dose of natural monopoly is necessary in telecommunications because it is so capital-intensive and wide-ranging.

"If you don't have the resources from the get-go, you're not going to be successful," he said. "That can be discouraging."

The FCC's apparent support of Nextel's attempt to acquire the licenses has raised eyebrows.

"I think it's completely inappropriate that the FCC would be favoring one wireless carrier over the others," McKell said. "It's appropriate for the FCC to look at alternatives to bankruptcy, but they need to do it in a manner that is fair to all carriers and not what appears to be a behind-the-door negotiation."

Spectrum caps were designed to promote competition, allowing smaller companies to get involved without enduring a lot of upfront costs.

Functionally, Nextel should fall under the spectrum cap and not be allowed to have those licenses, Cotton said. But because the FCC still is considering it as an option, the issue remains murky.

"It's like Animal Farm," Cotton said. "All animals are created equal, but some animals are more equal than others."