Supreme Court won't hear NextWave appeal

The court's refusal to hear the company's appeal regarding its forfeiture of 90 wireless licenses means there's one less obstacle to next month's auction of the licenses to competing providers.

2 min read
WASHINGTON--Bankrupt wireless provider NextWave Telecom continued its losing streak in federal court Monday.

The U.S. Supreme Court declined for the second time to hear NextWave's appeal of its forfeiture of 90 wireless licenses to the Federal Communications Commission, which occurred in 1988 after NextWave defaulted on payments to the FCC and entered bankruptcy protection.

On Dec. 12 the FCC plans to auction those 90 licenses and about 400 others, which cover most of the major U.S. markets and are highly sought after by large wireless network operators.

NextWave still has a lower-court appeal pending and could receive relief from a lame-duck Congress next month. Thus, while the Supreme Court ruling makes it more likely that the auction will occur as scheduled, the possibility of a delay still exists.

In addition, the overall price at which the licenses are sold at auction could be depressed, analysts said, as NextWave could succeed in winning them back.

"Bid winners and the FCC could either be big winners or big losers, with no safety net in between," said Current Analysis analyst Todd Harrington. "NextWave's unresolved litigation will definitely have a chilling effect on potential bidders both as to how much they are willing to spend on these licenses and also if they will bid at all."

The U.S. Court of Appeals for the District of Columbia Circuit recently denied a NextWave motion to delay the FCC auction of so-called C- and F-block licenses, but it did agree to examine whether the FCC was within its rights to take back the licenses when NextWave defaulted. If NextWave wins that proceeding, which won't occur until after the auctions are concluded, any successful bidder for NextWave licenses will have to forfeit them.

Auction rules would allow those bidders to get their money back, Harrington said, but "this leaves bid winners in the same boat they were in prior to the auction, needing more spectrum to relieve system congestion and to begin laying the groundwork" for third-generation wireless, or high-speed data and streaming video services.

Harrington believes Congress, when it returns in a lame-duck post-election session next Monday, will move to postpone the auction. Senate Majority Leader Trent Lott, R-Miss., suggested before the election that such a move made sense. But he also said more recently that he wants Congress to focus in this session primarily on passing the spending bills required by law and not so much on other matters.