Settlement expected in 3G spectrum dispute

The US federal government, major cellular carriers and NextWave Telecom Inc. are close to reaching a multibillon-dollar agreement to resolve a long-running battle over spectrum licenses needed to support expansion of mobile wireless services nationwide, according to news reports published today.

The agreement, according to reports, will result in a group of major nationwide carriers led by Verizon Wireless Inc. in Bedminster, New Jersey, paying close to US$15 billion for spectrum that was awarded to NextWave for $4.7 billion in a government auction in 1997. The licenses were reclaimed by the Federal Communications Commission when NextWave failed to make payments after seeking bankruptcy protection. The FCC reauctioned that spectrum in January this year for a total of $17 billion, with Verizon leading the bidding field.

In June, a federal appeals court in Washington ruled the FCC had no right to reclaim the licenses, and NextWave started arranging financing to roll out its network, though the FCC said it planned to appeal the dispute to the U.S. Supreme Court.

In July, Verizon and six other wireless carriers that had gained significant amounts of spectrum in the January auction offered to pay NextWave $5 billion to walk away from the dispute and hand over the licenses to them. The carriers, in turn, would pay the FCC another $10 billion.

Jeffrey Nelson, a spokesman for Verizon, said he could neither confirm nor deny the published reports of an imminent settlement. NextWave didn't return calls for comment.

Craig Mathias, an analyst at FarPoint Group in Ashland, Massachusetts, said that from a "business point of view, it makes more sense for NextWave to settle than build out its network." He added the agreement would also provide the government with a significant amount of funds as the nation gears up to a war footing.

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