NextWave to begin buildout, not looking to sell

For those who hoped for a quick resolution to the NextWave (www.nextwavetel.com) spectrum situation, maybe it’s time to dig in for the long haul.

Just over a week after the historic decision that returned 90 licenses to the survivor-carrier, NextWave announced a 3G network contract with Lucent (www.lucent.com). The agreement calls for Lucent to build cdma2000 networks in NextWave’s 95 PCS markets.

Complete voice and data networks will begin in Detroit and Madison, WI, with the remaining markets to get the initial phase of a data-only network. Buildout is scheduled to begin this summer and is expected to finish within 10 months. The deal is an all-cash contract.

“They (NextWave) have represented to us that they have adequate funding to complete this work,” said Mary Ward, Lucent spokesperson.

The Detroit and Madison markets are two licenses that were not a part of the lengthy legal battle between the NextWave and the FCC (www.fcc.gov); the carrier paid in full for them in 1997.

“All the time while we were in bankruptcy, we were able to have our engineers there testing and doing the microwave clearance,” said Michael Wack, NextWave deputy general counsel. “Those are two markets that are ready to go, where we only have to import that equipment and bolt it down and get ready to turn it on.”

With the University of Wisconsin-Madison and several large enterprises in Detroit, those markets are ripe for a data offering, Wack added. The initial data connection will offer speeds of approximately 144kb/s and will move to approximately 600kb/s in 2Q02.

Wack said the data service will be available via a variety of connections, including handsets, PCs and PDAs.

Given that NextWave doesn’t have any buildout to speak of, the carrier can focus on developing pure 3G networks. Wack said the carrier views this as a greenfield opportunity.

“The spectrum isn’t burdened with a lot of the first and second generation equipment, and we don’t have the complex technical problems that the incumbent wireless carriers have – not only in overlaying a new technology on an old network but also then migrating customers from one technology to the other – we get to come in fast and clean," he said.

NextWave and Lucent would certainly seem like easy allies as both companies have suffered through disastrous times and have a long way to climb before returning to former fortunes.

“Lucent has arguably fallen on hard times recently but it’s still a premier, if not the premier, equipment manufacturer in the world,” Wack said.

As for NextWave, the carrier isn’t looking back and has no intentions of taking an industry buyout.

“We feel good about the opportunity to get out of the courtroom and get into the field,” Wack said. “The company always intended to retain its licenses, build a nationwide network and compete. Our investors see the long-term play as the one that is financially viable and will bring the greatest return. It’s a simple business decision, no hard feelings.”

Industry insiders believe that should NextWave accept a buyout, the Lucent contract would transfer to whoever ended up with the licenses. A Lucent spokesperson could not comment on specifics of the agreement.