NextWave signs deal with Lucent for 3G wireless network

US provider NextWave Telecom Inc. has signed an agreement with Lucent Technologies Inc. to build the first phase of a third-generation (3G) digital wireless network, using the spectrum it regained after a court battle with the U.S. Federal Communications Commission.

Under the US$100 million all-cash deal, Murray Hill, N.J.-based Lucent will begin construction of a wireless voice and data network in Detroit and Madison, Wis., based on Code Division Multiple Access technology. Lucent will also deploy the initial phase of a data-only network in NextWave's remaining 93 markets, NextWave said in a statement yesterday. Work is expected to be completed over the next 10 months.

"NextWave's vision and mission is to fundamentally alter how people use wireless," said Allen Salmasi, NextWave's CEO and chairman in the statement. "It's not just about voice anymore. It's about extending the desktop Internet experience to a broad range of wireless devices. We call it mobile DSL, and we are striving to be the first to market with this innovative broadband wireless service."

The deal signals NextWave's plans to use the spectrum licenses it is due to get back from the FCC sometime this year. The company had originally won the licenses in a 1995 auction with a bid of $4.7 billion. But the FCC reclaimed the licenses after NextWave filed for Chapter 11 bankruptcy protection and failed to meets its payment schedule.

The company fought back in court, but the FCC moved ahead with another auction in January, and the much-desired cellular telephone frequencies were sold to several wireless network providers, including Verizon Wireless Inc. in Bedminster, N.Y., Alaska Native Wireless LLC of Fairbanks, Alaska, and Salmon PCS in Bethesda, Md., for a total of nearly $16.9 billion.

That second auction was thrown into doubt last month when the U.S Court of Appeals for the District of Columbia ruled that the FCC violated bankruptcy laws by repossessing the spectrum licenses.

Meanwhile, NextWave spokesman Michael Wack responded to reports that the company has been in talks to reach a settlement with Verizon Wireless.

"NextWave has always been upfront about its intention to build out a PCS [Personal Communication Service] network, so I'm mystified by reports that we are pursuing a settlement that causes our PCS licenses to be transferred to others," he said. "We'd love to have Verizon as a customer of our network services and hope we can get them interested in our business plan."

NextWave said it is engaged in reorganizing its business in a Chapter 11 proceeding pending before a U.S. Bankruptcy Court in the Southern District of New York. On June 13, the court authorized additional debtor-in-possession financing that was sufficient for the company to fund its agreement with Lucent, the company said.

"We have ample funds on hand to finance this initial construction effort," said Frank Cassou, NextWave's executive vice president and general counsel, in the statement. "We expect to file a plan of reorganization shortly, and we anticipate emerging from bankruptcy soon thereafter. Financing for our full-scale network buildout will be provided for in our reorganization plan."

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