The NextWave case is a symptom of the desperate shortage of wireless spectrum. 01/08/08 ReleVents hed: Spectrum woes dog wireless dek: The NextWave case is a symptom of the desperate shortage of wireless spectrum. by James Mathewson
Readers who have not yet read the Aug. 13th issue of BusinessWeek should check out its excellent commentary “8 Lessons from the Telecom Mess”. One of the lessons relates to why the United States is so far behind the rest of the world in wireless services. One of the main reasons for this is a lack of available spectrum. The radio frequencies over which wireless communications flow are in short supply, and companies can’t offer services without dedicated frequencies to carry them.
The report recommends that we wrest spectrum away from two groups that are just squatting on unused frequencies–the Department of Defense (DOD) and the big TV networks. The TV networks need the extra spectrum for high-definition television, and the DOD claims to need it for future war-related needs. Though I agree with the report’s suggestions, I don’t think we are going to get spectrum away from these squatters. The Federal Communications Commission (FCC) might try to get this spectrum, but legislative records do not support action against these congressional darlings. So we’re going to have to find spectrum under other rocks.
The primary place the FCC has looked for unused spectrum is from companies such as NextWave Telecom Inc., which have purchased spectrum at auction and failed to use it for a number of years. As a story on our site today says, the FCC is in a bitter court battle with NextWave over unused spectrum and is reportedly pleased that the Department of Justice (DOJ) is taking its case to the Supreme Court. In this case, NextWave is not only squatting on spectrum, it has failed to pay the full $4.7 billion it owes for the frequencies, which are now worth an estimated $17 billion. To further complicate matters, the FCC has already auctioned the spectrum to Verizon Communications and others assuming it could just repossess the frequencies on which NextWave defaulted.
As another story on our site today reports, NextWave will continue to fight for the spectrum all the way to the Supreme Court while it completes its Chapter 11 bankruptcy protection against its creditors, including the FCC. According to the story, the company is “extremely disappointed” that the FCC has convinced the DOJ to appeal a lower court ruling that would allow NextWave to own the spectrum. It plans to offer so-called 3G wireless solutions over the frequencies that have been repossessed by the FCC.
My question is, given the critical shortage of available wireless spectrum, should a company in Chapter 11 be allowed to hog a big chunk of available frequencies? Or should other wireless companies, which have already paid for the spectrum after it was re-auctioned, be given the frequencies? My view is, whatever the merits of the legal case, it is highly unlikely NextWave will be able to succeed even if it wins the Supreme Court battle. So the spectrum will just languish as NextWave flounders in its attempts. Clearly, the FCC has consumers’ best interests in mind here: It is certainly in our best interests to have a reputable wireless company selling services over that spectrum. Perhaps our spectrum shortage would be a little less critical if the FCC was given the authority that Congress vested in the commission. Hopefully, the Supreme Court will take this into account as it makes its ruling.
James Mathewson is editorial director of ComputerUser magazine and ComputerUser.com.