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There's Gold In That There Dead Air

NextWave Could Collect Billions

By Christopher Stern
Washington Post Staff Writer
Thursday, September 2, 2004; Page E01

At a time when the nation's wireless companies are increasingly desperate for more airwaves to serve a fast-growing base of 160 million customers, little-known NextWave Telecom Inc. has networks up and running in 26 markets but has never served a single paying customer.

NextWave's wireless licenses are the 21st-century equivalent of undeveloped beachfront property. After winning a battle with the Federal Communications Commission over its airwaves that went all the way up to the Supreme Court, the New York-based company is preparing to put them to use.


Allen B. Salmasi started NextWave Telecom Inc. in 1995. The company didn't work out as he had planned and is in bankruptcy protection. (Nextwave Telecom Inc.)

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It plans to emerge from bankruptcy protection next month, and either open for business or sell its rights to the airwaves for what many analysts believe could be about $3 billion.

For now, the company is making sure the valuable assets do not slip from its grasp. NextWave built the networks to satisfy a 10-year old FCC regulation and solidify its claim to the licenses.

In Washington, NextWave's operations are typical of the bare-bones networks it operates in other cities such as New York and Los Angeles. It transmits signals that cover most of an area inside the Capital Beltway from the Potomac River east to the Maryland suburbs. But the airwaves carry no phone calls, no text messages, and no streams of data like those on the networks of established companies such as Nextel Communications Corp. or Verizon Wireless.

Michael R. Wack, NextWave senior vice president, said the company is barred from serving paying customers without the approval of the bankruptcy court. "It's not an elaborate network but it works 24 hours a day, enough to satisfy the FCC's requirements," he said.

Having put its networks in operation, NextWave plans to file a reorganization plan with U.S. Bankruptcy Court in New York next month and depart Chapter 11 protection by year-end.

Analysts estimate that the company's market value, based entirely on the resale value of its licenses, will be $2.9 billion to $3.5 billion. They also expect that once it emerges from Chapter 11, the next logical step will be a sale.

"This is a good time for the company. It's a good feeling, everyone who put their faith in NextWave will get it rewarded," said Wack, who has not ruled out the possibility that the company will go into business for itself.

The value of NextWave's spectrum is two to three times what it bid in 1996, according to Igor Volshteyn, an analyst with Tejas Securities Group Inc. who owns shares of the wireless company.


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