FCC GRANTS NEXTWAVE CERTIFICATIONS ON BUILD-OUT MANDATES

The FCC Wireless Bureau last month upheld NextWave’s interpretation of the “tolling period” for its construction build-out deadlines, rejecting a challenge by N.Y. Telecom (CD March 4 p1). In that order, the Bureau granted a NextWave request that set the license construction deadlines for its C- and F-block licenses as 703 days after the original 5-year construction deadlines, subject to certain conditions. NextWave had asked the agency to clarify that the construction periods for its C- and F-block licenses were “tolled” for a total of 703 days, in part covering the period during which the FCC had cancelled the licenses for nonpayment -- Jan. 12, 2000, to Aug. 31, 2001. Part of that time also is covered by the settlement agreement on the then- disputed licenses, which Congress ultimately didn’t approve and which expired Dec. 31, 2001. NextWave had argued that time was required by law to be “tolled” because possession of valid licenses was a precondition to a construction requirement’s being enforced. The U.S. Supreme Court earlier this year upheld a U.S. Appeals Court, D.C., ruling rejecting an FCC decision to cancel NextWave’s licenses for a missed payment.

“We're very pleased that the Commission has approved our demonstrations of compliance with its build-out rule in all 95 markets where NextWave is licensed to provide broadband PCS services,” NextWave Chmn. Allen Salmasi said. “The Commission’s certification clears a major regulatory requirement for us, and positions us to complete our reorganization successfully and emerge from bankruptcy.” Salmasi said “deploying and continuously operating wireless facilities in so many markets” while undergoing reorganization in bankruptcy court pointed to the confidence of the company’s creditors’ committee and debtor-in- possession lender.

Disagreement over which construction deadlines had applied to NextWave predated the Supreme Court’s decision. The company had made initial construction filings for most of its C-block licenses in Jan. 2002 after the FCC had returned its previously cancelled licenses in 2001. N.Y. Telecom disputed NextWave’s contention that the settlement agreement reached by the FCC, NextWave and the re-auction winners in 2001 had given NextWave additional time to meet the construction requirements. NextWave said the period before the settlement agreement became void temporarily stopped the clock on its construction mandates. NextWave had teed up the issue for review at the FCC in a request for clarification or waiver of its construction deadline. N.Y. Telecom filed a challenge, arguing that NextWave had missed its deadlines and that its tests indicated that several NextWave sites either had no signal or had limited activity.

The Wireless Bureau said last week it was reviewing NextWave’s certifications that it had met its build-out requirements, with Bureau Chief John Muleta pledging to address the matter “as we would for any licensee.” The FCC updated its universal licensing system this week to indicate that the certification had been granted. The build-out deadlines covered under the Bureau’s earlier order on the tolling issue were Dec. 7 for the 63 C-block licenses and March 31 for the 22 F-block licenses.

“This was an important step because it removes one lingering concern about their regulatory battles with the FCC,” Legg Mason analyst David Kaut said. “The bigger battle is can they work out some sort of deal where industry would get access to some or all of the licenses at a price that works for NextWave as well as the government.” One financing challenge facing NextWave is the “widespread belief that the industry needs more consolidation -- not a 7th national carrier,” Kaut said. As a result, the carrier faces skepticism from investors reluctant to fund a standalone carrier.

N.Y. Telecom earlier this month filed an application for review at the FCC over the Bureau’s decision to toll the construction deadlines for NextWave’s licenses. N.Y. Telecom urged that the decision be reversed, saying it ran against FCC rules and precedent and “involves a question of law and policy that has not previously been resolved.” N.Y. Telecom said FCC rules didn’t allow tolling of construction deadlines. If an extension of build-out mandates was warranted, licensees could seek more time through proceedings such as waiver requests, it said. PCS construction deadlines don’t allow specifically for tolling, although elsewhere in the FCC’s rules, it is allowed for broadcast station construction deadlines, the company said.

NextWave submitted an ex parte filing to the FCC Fri. detailing materials it said showed it met the 5-year broadband PCS build-out rule in all markets where it was licensed. Network elements it cited included mobile switching centers in Las Vegas and Carteret, N.J., and a data network that included 3-Mbps Internet portals, blocks of IP addresses and routers, firewalls and ethernet switches.