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Wireless bidders seek help
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June 26, 1997: 8:43 a.m. ET
Companies bid billions for spectrum licenses, now say they can't pay up
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NEW YORK (CNNfn) - Some of the wireless communications companies that bid billions for personal communications licenses last year are now saying they can't pay for them and are asking for relief.
That auction's largest bidder, NextWave Telecom Inc., which bid $4.2 billion, said it hasn't been able to raise enough to pay the government and build a new network, the Wall Street Journal reported Thursday.
NextWave and others want the Federal Communications Commission to restructure their debt, postpone their payments for as long as eight years or reduce the prices they bid by more than half.
Last year, the government auctioned off spectrum space for personal communications services to 89 companies for $10.2 billion. The auctions have been widely touted by the government as a way to raise money to combat the federal deficit.
The troubled companies claim that without the restructuring and other measures, the government's plans to spur competition in the industry will not occur.
Smaller companies like NextWave were allowed to bid in the first place because they often had the backing of larger companies. In NextWave's case, Sony Corp. was on its side.
The FCC finds itself in a difficult position and has not yet decided what it will do. If it helps out these companies, bidders who lost out may take legal action. If the agency does not assist the troubled firms, the companies may seek protection in bankruptcy court, delaying the licenses from being auctioned again.
So far, successful bidders have defaulted on 21 wireless licenses, and the FCC has had to reauction 18 licenses.
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