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High court to hear NextWave-FCC case

The U.S. Supreme Court says it will decide whether the government can repossess wireless spectrum licenses from the bankrupt phone company.

The U.S. Supreme Court on Monday said it will decide whether the government can repossess wireless spectrum licenses from NextWave Telecom.

The high court will begin hearing the case in October and a decision is not likely until early 2003.

The licenses are coveted because they will ease what carriers say is a shortage of airwaves they use to offer cell phone and high-speed wireless Internet service. If NextWave ultimately wins the case, the company will likely negotiate agreements with other carriers to use the same spectrum.

Federal Communications Commission Chairman Michael Powell cheered Monday's decision, saying the U.S. Supreme Court will answer a crucial legal question for the FCC. The FCC asked the U.S. Supreme Court to hear the case.

"This will allow the court to clarify the relationship between public spectrum auctions and the U.S. bankruptcy laws," Powell said in a prepared statement.

But wireless carriers say Monday's decision means more delays before they can use the spectrum, which has been tied up by litigation since the late 1990s.

"The continued uncertainty as to how these licenses will be put to use and the further delay now with the Supreme Court decision is another reason why the FCC should nullify the auction" and return our money, Verizon Wireless spokesman Jim Gerace said.

NextWave is a New York-based wireless phone company that bought licenses to expensive airwave spectrum in 1996 for about $4.7 billion. The company made $500 million in payments before entering bankruptcy protection in 1998.

The FCC tried to re-auction the licenses last year after NextWave did not pay for them on time. However, the U.S. Court of Appeals for the District of Columbia ruled last June that repossessing the licenses was a violation of bankruptcy law.

The FCC had asked the Supreme Court to hear an appeal, and if the high court had refused to hear the case, the litigation would have likely ended.

Verizon Wireless put out $1.7 billion during the auction. If the high court rules that the FCC can take back the licenses, Verizon Wireless and other carriers believe they will not be able to recoup the funds they paid out.

Verizon Wireless has already taken out a separate lawsuit against the FCC to get the return of its money.

Sprint also expected to get $300 million returned if the Supreme Court refused to hear the case. A representative could not be immediately reached for comment Monday.

AT&T Wireless owns a portion of the Alaskan wireless company that was the third carrier to win the spectrum at the auction. An AT&T Wireless representative had no immediate comment.

NextWave had already switched on pieces of its network in 60 markets and planned to offer commercial service later this year.

"Everyone was looking for finality from the court today," said Michael Wack, NextWave senior vice president. "We are all disappointed that there would appear to be significant litigation ahead."